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CNN
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Tesla finally announced the date of its annual meeting, after dozens of angry shareholders asked what was taking it so long.
A group of Tesla shareholders Wednesday sent a letter to the company demanding it schedule an annual meeting, as legally required. On Thursday, Tesla did just that, setting a date for November 6.
But that date is four months beyond the legal deadline for its next shareholder meeting. Texas law, where the company is incorporated, requires annual meetings every 13 months.
The shareholder letter this week, which includes some Democratic officials who oversee public pension funds holding Tesla shares, had pointed out this deadline, demanding the company set a date.
“This delay is particularly troubling in light of the growing investor scrutiny Tesla faces,” the letter said.
The disagreement with shareholders over a setting a meeting date – a typical exercise at thousands of companies – underscores the trouble Tesla is in, with even longtime Wall Street fans expressing concerns about the company’s direction and its controversial CEO, Elon Musk.
“We believe this is a tipping point in the Tesla story and ultimately the Tesla board needs to act now and set the ground rules for Musk going forward around his political ambitions and actions,” Wedbush Securities Dan Ives wrote in a note to clients Tuesday.
Such meetings give shareholders the at least the theoritical opportunity to speak directly with the board and CEO Elon Musk.
Among the many problems facing Tesla: the worst sales declines in the company’s history, plunging profits and stock prices, and upcoming changes to US incentives for electric vehicles that could cost the company billions. And of course, backlash to Musk’s political activities and previous connection to President Donald Trump causing lasting brand damage.
The filing by Tesla Thursday did not give a reason for the meeting delay and the company did not respond to a request for comment.
One of the signatories, New York City Comptroller Brad Lander, said the announcement of the November meeting is not enough to satisfy the group’s concerns.
“Tesla’s announcement of its annual shareholder meeting is a welcome, if belated, recognition that the rule of law applies to everyone – even the world’s richest man and his company,” Lander said in a statement to CNN. “The basic rules of corporate governance rules are not optional; they are fundamental protections for shareholders and public markets. Together with other long-term investors, we will remain vigilant and hold Tesla accountable to shareholders.”
Annual meetings give shareholders relatively little power to confront a company’s executives. Shareholders can ask questions, but those getting the chance to ask can be controlled by the company.
Tesla allows individual shareholders to post questions for management during their earnings calls, but controls which questions will be asked during the call itself. Typically, the tougher questions are not chosen.
Shareholders do have the option of waging proxy battles to try and set corporate policy or replace board members, but those are expensive and generally unsuccessful efforts.
Tesla shareholders have demonstrated strong support for Musk in the past, although that was before he stoked many of the past year’s controversies, such as much of his political involvement.
At the June 2024 annual meeting, shareholders voted 84% in favor of restoring a massive 2018 pay package for Musk, which had been previously thrown out by a Delaware court. The court subsequently voided the pay package. Tesla is appealing that decision.
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