Behind the video
Tesla Shareholder's BIG VOTE: Elon Musk’s Pay Plan & Texas Move w/ Alexandra Merz
Overall Thesis
Dave Lee interviews longtime Tesla shareholder Alexandra Merz about the upcoming shareholder meeting's two key votes: re-approving Elon Musk's 2018 compensation plan and redomesticating Tesla from Delaware to Texas. Both speakers are strongly pro-Elon and pro-Tesla shareholders who walk through the legal, procedural and voter-turnout dynamics of each vote without discussing Tesla's share price outlook.
Narratives
TSLATeslaBoth the host and guest are committed long-term Tesla shareholders who support re-approving Elon Musk's 2018 pay package and moving the company's incorporation to Texas, viewing Musk's continued leadership and expanded voting influence as critical to Tesla's long-term success. The conversation focuses on shareholder-vote mechanics, legal precedent and investor turnout rather than a price or return forecast for the stock.
Key Arguments
- The guest liquidated essentially all other holdings to concentrate in Tesla in 2020 and considers herself in it for the long term (5-10+ years).
- Both speakers believe Elon Musk is the right person to lead Tesla and that his incentive alignment via the compensation plan and increased voting power protects the company from being taken over by short-term or 'bad' actors.
- They expect the compensation plan re-approval vote to pass with 50%+ (guest estimates 'optimistic around 60%') of cast votes.
- They view the Texas redomestication vote as far harder to win because of the Trip Advisor precedent requiring 50% of all outstanding shares, not just cast votes.
- Four of Tesla's ten largest institutional holders have reportedly already indicated support for both measures.
- Significant effort has gone into helping retail shareholders (which make up ~40-47.5% of voting power net of insiders) actually cast proxy votes, which the guest sees as decisive to the outcome.
Risks acknowledged
- The presiding Delaware judge is viewed as unfavorable and has already ruled against the original 2018 package.
- A plaintiff's attorney is seeking roughly $5-6 billion in fees and may oppose the ratification process.
- Low awareness and voting-access problems among retail shareholders (especially in Europe and Asia) could cause the Texas vote to fail even if sentiment is broadly supportive.
- If the Texas vote fails, Tesla would have to pursue a new Delaware-based compensation plan, which the guest frames as a less desirable 'Plan B'.
Hedges & Caveats
- The compensation plan vote still faces additional Delaware ratification procedures (2-2-4 and 205) even if shareholders approve it.
- The Texas redomestication vote requires 50% of all outstanding shares (per the Trip Advisor precedent), a much higher bar than the compensation plan vote.
- Many retail investors, especially overseas, were having technical difficulty actually casting their votes.
- The presiding Delaware judge is seen as unfavorable/unpredictable for Tesla's side.
- Guest voices confidence levels as personal speculation, not certainty.