The charismatic and sometimes controversial head of Tesla will be facing a tough audience tomorrow when the meeting starts at 2:30 p.m. PST. Shareholders are expected to vote on a number of executive decisions that could affect the course of the company and even Musk’s position as chairman of the Tesla board.
Despite the challenges to his position as head of the company, the Financial Post is saying Musk may be able to count on some powerful friends – Big fund managers.
These are the investors who cited Musk’s forceful persona in weighing their decisions to buy into the company in the first place, and they will likely stick with Musk at tomorrow’s meeting, according to many analysts and investors.
In a statement to Reuters, Morningstar analyst David Whiston noted that the chances of Musk being voted out of his chairman’s position are rather slim, considering that Tesla’s big investors fully support the charismatic entrepreneur.
“I doubt they would vote against Elon because if you don’t believe in Elon, why are you in the stock?” he said.
Dissension in the ranks
In April, Tesla shareholder Jing Zhao, who owns 12 shares of the company’s common stock, submitted a proposal to remove and replace Musk as chairman. His reasoning makes sense to many shareholders. According to Zhao, with Musk serving as both CEO and Chairman of the Board, this may not be an effective strategy for Tesla as it wades into more competitive markets.
Zhao’s proposal has the support of proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis. The two agencies also support the Union-affiliated investment adviser CtW Investment Group’s initiative, which calls for the removal of three Tesla board members.
The three directors up for a vote on Tuesday include Musk’s brother, Kimbal Musk, and James Murdoch, the CEO of 21st Century Fox (FOX) and son of Rupert Murdoch, and Antonio Gracias, head of Valor Management, an early investor in Tesla.
CTW Investment Group, which works with union-sponsored pension funds, sent a letter to the SEC in May. The company wrote: “We admire Tesla as a successful innovator with an environmental mission; however, its continuing success looks more tenuous than ever. Especially in light of CEO Elon Musk’s startling refusal to answer straightforward questions from analysts on a recent investor call, Tesla shareholders need to let the board know that it must raise its game.”
It seems as though the shareholder meeting will be focusing on getting rid of the three directors because as the CTW letter points out: “Kimbal Musk’s renomination goes to the heart of the problems with Tesla’s board: Too many of these directors, including all three of this years’ nominees, are incapable or unwilling to contradict Elon Musk’s whims.”
It’s almost as if CTW is saying that Elon Musk has become a loose cannon. We shall see how the vote goes.
