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Elon Musk leaks results from Tesla’s shareholder vote as messy week begins

Elon Musk has leaked some of the results from Tesla’s shareholders vote as a messy week begins for the shareholders of the electric car company.

Tesla is holding its annual shareholder meeting on Thursday, June 13.

During the meeting, Tesla will release the results of the shareholders’ votes regarding several proposals, including the highly publicized vote to reinstate the CEO’s compensation package rescinded by a judge earlier this year and Tesla’s incorporation move to Texas.

However, CEO Elon Musk has already leaked some of the results:

Musk is claiming that “roughly 90%” of the retail shareholders who have voted to data have voted for his pay package to be reinstated and the incorporation move to Texas.

There are two important caveats to his statement: 90% of retail shareholders doesn’t mean 90% of the shares held by shareholders and retail shareholders also represent less than half of Tesla’s outstanding shares.

Institutional investors represent the majority.

Public companies generally only release the results of a shareholder’s vote at a shareholder’s meeting once the voting is done.

This was actually a problem with the recent Disney proxy battle. Some investors called for Disney to be investigated by the SEC after vote results were leaked to the media prior to the vote being close. This was seen as a PR tactic by Disney since only the company and its advisors could have had access to the results for them to be leaked to the media.

Now, in this case, Tesla’s CEO is directly releasing some of the results publicly.

Electrek’s Take

The main thing people need to keep in mind is that regardless of the results of the vote, nothing ends on June 13.

The results will simply be used in the appeal process, which is still months away.

Top comment by Philip234

Liked by 15 people

There are going to be many surprised folks on June 13. The vote is not binding and does not change anything related to Mr. Musk's pay package. It is a legal strategy to help win on appeal. From Bloomberg:

"Even if Tesla Inc. shareholders vote later this week to ratify Chief Executive Officer Elon Musk’s $56 billion pay package, it’s unlikely to reverse a judge’s decision to nullify the 2018 compensation deal.

That’s because the June 13 vote has more symbolic weight than legal power. Shareholder approval may help Tesla with an appeal or a rehearing in a new case, but it cannot overturn Chancery Court Judge Kathaleen St. Jude McCormick’s January ruling, some legal scholars say."

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You know what else is going to be used in the appeal process? Every careless thing Elon has said in the last few months regarding the proxy battle and his threats to shareholders.

And with the vote now being days away, I doubt Elon will be able to stop himself from putting his foot in his mouth. It’s going to be a messy week that will be under a legal microscope in the coming months.

Like this comment for example, Elon is publicly agreeing with a statement saying that the vote is not about his compensation package but about “shareholder democracy” being suppressed by a “random activist judge”.

An officer of Tesla can’t be saying that publicly and not expect it to come up in the inevitable litigation around this issue. Elon is a legal liability.

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