Key Tesla retail investors risk missing AGM vote

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Tens of thousands of Tesla's international retail shareholders, holding about $17 billion in stock, may not be able to vote at its annual meeting because investment platforms failed to put adequate cross-border systems in place.

The world's largest electric vehicle maker campaigned to get investors to support two resolutions in likely close votes at its June 13 meeting: one to reratify CEO Elon Musk's $56 billion salary and another to reincorporate the company in Texas. .

The latest move is aimed at protesting a Delaware judge's decision to overturn Musk's stock option package, the most lucrative in U.S. corporate history, over concerns about the board's independence. 'administration.

Tesla has an unusually high proportion of retail shareholders – who own about 30% of the company – and the significant hurdles to passing both votes, particularly the move to Texas, will require many of them to vote in favour. Chairman Robyn Denholm likened her task of winning the shareholder vote to climbing Mount Everest.

But many investors in Europe and Asia have found that they cannot vote electronically from outside the United States because the stock brokers and online trading platforms on which they hold their accounts d Actions do not have adequate systems.

Tesla estimates that about 3% of its shares could be affected, according to people familiar with the matter. That equates to $16.7 billion of Tesla's $558 billion valuation.

The vote to re-incorporate Tesla in Texas has a higher threshold, requiring a majority of all outstanding shares to vote in favor, meaning uncast votes are counted against the proposal.

“Given the size of retail, every individual vote counts,” one of the people interviewed said.

Tesla is working with proxy solicitation firm Innisfree, which employs more than 100 people for the campaign. Their tactics include appealing to individual investors, sending out pamphlets – dubbed “fight letters” – encouraging people to vote, and a social media outreach campaign on the Musk-owned X platform.

Tesla and Innisfree tried to persuade brokers to implement new processes, but while a few were helpful, most did not, saying they had not had time to install the infrastructure, the sources said.

Hargreaves Lansdown, the UK's largest private investment platform with $120 billion in assets and 1.7 million clients, is one of the international brokers through which Tesla shareholders have could not vote.

“Last year we introduced AGM voting for UK and EU businesses and we are working to extend this service to other overseas jurisdictions,” the company said. In the case of Tesla, “we worked with our proxy service provider to try to facilitate this event on a one-off basis. However, this was not possible.

HL holds most of its clients' U.S. securities, including Tesla shares, as a Crest Custodian, or CDI, which historically did not allow voting in the EU or the United States. This year, Crest partnered with US fintech Broadridge to offer such a service, but it has not yet been rolled out to all US titles. Despite Tesla's fierce lobbying, it failed to install it in time for the automaker's votes.

BNP Paribas' Consorsbank, whose clients also represent a significant number of stocks, is another major player that does not offer proxy voting services for U.S. stocks, according to people familiar with the matter. Consorsbank was not available for comment.

Other obstacles may make retail investors less likely to vote. For example, Amsterdam-based online stockbroking firm Degiro charges a €10 fee for each shareholder wishing to vote, to cover its manual administration costs; and the Swiss company Swissquote requires its customers to call its service line.

Others have made exceptions in response to the Tesla-backed PR campaign. Swedish online bank Avanza, which does not generally offer voting services in foreign markets, sent an email to its customers informing them that it would allow it on a one-off basis.

The stakes are high, with even more riding on individual shareholder votes after the two big proxy advisors, Glass Lewis and ISS, urged Tesla owners to vote against Musk's pay resolution. Their opinion influences the decisions of large institutional investors. Tesla, however, received “cautious” support from the ISS for its reincorporation in Texas.

Vanguard, Capital Group, the Norwegian oil fund and State Street are among Tesla's top 10 shareholders who voted against the compensation proposal in 2018, which was nevertheless approved by 73%. Baillie Gifford's flagship Scottish Mortgage Investment Trust, one of the carmaker's longest-serving shareholders with a top-15 stake, announced plans to back Musk's $56 billion pay package.

However, the chief executive of Calpers – the largest US public pension fund and one of the top 25 shareholders with a stake of $1.67 billion – said in a CNBC interview on Wednesday that he planned to vote against the agreement, noting that he “did not believe in compensation.” is a measure of the company's performance.

Musk wrote on X in response: “Calpers broke the deal. Shame on them, they have no honor.

Tesla declined to comment.

Additional reporting by Sarah White in Paris