Dispute over CEO’s pay has exposed linger doubts
) shareholder vote over Elon Musk’s pay is in some ways a referendum on the performance of the company and its CEO.
“They’ve really struggled to grow,” said Toni Sacconaghi, a stock analyst at Bernstein who covers Tesla. “And part of the reason they’ve struggled to grow is they have no new models.” But some analysts still recommend buying the stock, because they expect Tesla’s growth to return when it eventually releases a lower-cost electric vehicle. “They still have significant volume growth ahead of them,” said Garrett Nelson, who covers Tesla for CFRA.
Shareholders approved the pay package in 2018, but a Delaware judge voided it in January on the grounds that, among other things, Musk had effectively overseen his own compensation plan. Tesla hopes that if shareholders back the package again, the court will reinstate it. Some big investors say they will vote against the pay deal, currently worth about $45 billion, because it is too large.
Musk has said he would like a 25% stake. “That’s not so much that I can control the company even if I go bonkers,” he said in January. “But it’s enough that I have a strong influence.”A pressing question is whether Tesla’s stock might fall if Musk loses the vote on the pay package. Investors might sell if they believe he is crucial to the company’s future. But because so much of his wealth is in Tesla, Musk might see little reason to stray.
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