Tesla Shareholders Pressure Board to Hold Annual Meeting by July 13

Last Annual Shareholders' Meeting Held in June Last Year
Texas Deadline Set for July 13 This Year
No Notice to Convene the Meeting Yet

Tesla shareholders have pressured the Tesla board of directors, which had been delaying the annual shareholders' meeting, to convene the meeting.

According to the Wall Street Journal (WSJ) on July 9 (local time), a group of 27 Tesla shareholders, including institutional investors, sent an official letter to the Tesla board on this day demanding that the annual shareholders' meeting be convened. The shareholder group includes public pension funds from New York and Illinois, as well as SOC Investment Group, which manages labor union funds. The shareholders urged the Tesla board not to delay the meeting any longer, warning that if the board does not convene the meeting by July 13, it will be in violation of Texas state law.

Texas, where Tesla is incorporated, stipulates that if shareholders request it, the annual shareholders' meeting must be held within 13 months of the last meeting. Tesla last held its annual meeting on June 13 of the previous year. Based on this, July 13 of this year is the deadline for the next shareholders' meeting. Except for the period during the COVID-19 pandemic, the Tesla board has typically held its annual meeting in May or June. However, this year, even as of July, the board has not even issued a notice to convene the meeting.

The Tesla board stated that the date for the next shareholders' meeting has not yet been set, and that the submission of the proxy statement, which explains the agenda items to be addressed at the meeting, has also been postponed. Kevin Thomas, CEO of Canadian investment advisory firm SHARE, told the WSJ, "Now is a critical time for the board to face shareholders and answer questions about the company's performance and the CEO's focus."

So far this year, Tesla has struggled with sluggish sales, and its stock price has fallen by more than 20%. Analysts say that the active political activities of Tesla CEO Elon Musk have also become a burden for the company. Musk, who was once considered one of former U.S. President Donald Trump's closest associates, also served as the head of the Department of Government Efficiency (DOGE). He was deeply involved in federal budget-cutting efforts, which fueled negative sentiment toward Musk, and this backlash spilled over to Tesla. In May, major pension funds and institutional investors in Tesla demanded that Elon Musk "devote more time to Tesla."

In May, the Financial Times (FT) reported that the Tesla board was exploring new compensation plans for CEO Musk, including stock options worth tens of billions of dollars that had previously been blocked by a court ruling. The report stated that the board had postponed the shareholders' meeting in order to first prepare this compensation plan.

The compensation package agreed upon in 2018 between Musk and the Tesla board included a step-by-step incentive plan based on management performance. However, in a lawsuit filed by minority shareholder Richard Tornetta, who opposed the plan, the Delaware court ruled in favor of the plaintiff and invalidated the compensation package. Musk and the Tesla board have appealed this ruling to the Delaware Supreme Court. According to the WSJ, it remains unclear whether the Tesla board will create a new compensation package for Musk or restore the compensation that has not been paid since 2018.

At last year's shareholders' meeting, a proposal to move Tesla's corporate headquarters to Texas was put to a vote and passed.