Baillie Gifford backs ratification of Elon Musk’s 2018 Tesla pay package: report

Just a few days before Tesla investors decide whether Elon Musk’s 2018 CEO Performance Award will be ratified, some of the company’s largest shareholders are taking sides on the matter. These include Scottish fund manager Baillie Gifford, one of the electric vehicle maker’s largest shareholders, which reportedly noted that it would be voting in favor of the ratification of Musk’s 2018 pay package.

Baillie Gifford has been a longtime Tesla shareholder, at one point even becoming the company’s second-largest stockholder after Musk himself. The firm has also held TSLA stock for over a decade. The firm started trimming its TSLA shares in 2020, however, and today, the Scottish fund manager holds 0.5% of Tesla stock across several of its funds. Baillie Gifford’s current Tesla stake is estimated at about $3.1 billion.

As per a report from Bloomberg News, Baillie Gifford is set to support the ratification of Elon Musk’s 2018 CEO Performance Award, which has already been fully achieved by the CEO. The publication noted, however, that the Scottish fund manager did not provide a comment about its Tesla vote.

The ratification of Elon Musk’s 2018 pay package has been a notable topic among Tesla investors, and over the past weeks, several key stockholders have noted that they would be voting against the proposal. These include proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis, both of whom have stated that TSLA shareholders should reject the ratification of Musk’s compensation plan.

A number of prolific investors have also come out in favor of the ratification of Musk’s 2018 CEO Performance Award. These include longtime Tesla bull ARK Invest’s Cathie Wood, who noted that Musk’s 2018 pay package is aligned with TSLA stockholders because it only rewarded the CEO unless he created “tremendous value for Tesla shareholders.”

In fact, in 2018 and 2019, when Tesla was scaling the Model 3 in what Elon described as “production hell”, analysts and media pundits peppered their narratives with the word ‘bankruptcy’. Indeed, Morgan Stanley dropped its bear price target to ~$1 on a split-adjusted basis.

— Cathie Wood (@CathieDWood) June 6, 2024

“In fact, in 2018 and 2019, when Tesla was scaling the Model 3 in what Elon described as ‘production hell,’ analysts and media pundits peppered their narratives with the word ‘bankruptcy’. Indeed, Morgan Stanley dropped its bear price target to ~$1 on a split-adjusted basis,” Wood noted.

Legendary investor Ron Baron has also spoken up in support of the ratification of Musk’s 2018 compensation plan.

“Elon’s compensation contract contained aggressive performance metrics that few in 2018 believed could be achieved. If these aggressive performance metrics had not been achieved, Elon would have received nothing. When Tesla achieved targeted earnings, revenues, and market cap metrics, Tesla’s shareholders benefitted greatly. Tesla’s market cap when Elon’s pay package was approved on March 21, 2018 was $53.5 billion. It is approximately $550.75 billion today, after having reached a high watermark of $1.24 trillion in November of 2021. He performed under his compensation contract. He earned his pay,” Baron wrote in a letter to clients.

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