T. Rowe Price says 2018 Tesla pay aligned with investor interests

By Thomson Reuters Apr 18, 2024 | 3:54 PM

By Ross Kerber

(Reuters) – Mutual fund firm T. Rowe Price said Elon Musk’s record-breaking 2018 pay package from Tesla “demonstrated strong alignment” with the interests of investors at the electric carmaker.

The comments from the 10th-largest Tesla investor mark important support after a Delaware judge in January voided the $56 billion package as being unfair to investors because it was negotiated by directors who appeared beholden to Musk.

In response Tesla said in a preliminary proxy statement on Wednesday that it will hold an unusual special vote at its June 13 annual shareholder meeting to re-approve its chief executive’s 2018 pay package.

In an email exchange through Thursday a T. Rowe Price representative said it was “premature” to say exactly how the company’s funds would vote at the meeting on particular proxy items.

But the representative also sent a company statement that “With respect to executive compensation, we believe the 2018 plan demonstrated strong alignment with the interests of long-term investors, and it was followed by an impressive, validating period of value creation.”

T. Rowe of Baltimore held 22.4 million Tesla shares as of Dec 31.

In its proxy statement Tesla wrote that dozens of institutional stockholders told the company the 2018 compensation plan “should be fixed” and included lines from a letter sent by T. Rowe Price.

In it the fund firm suggested a new shareholder vote and said that Musk had met the terms of the original award. “The requirements of the 2018 package were extraordinarily ambitious — and they were delivered,” T. Rowe Price’s letter states.

T. Rowe Price declined to share a full copy of the letter. In its statement the company also said that “T. Rowe Price is a longstanding investor in Tesla. As such, we recently wrote to the Tesla board offering recommendations on a range of governance topics. The recent compensation ruling from the Chancery Court of Delaware was just one of them.”

(Reporting by Ross Kerber; Editing by Chizu Nomiyama)