Morgan Stanley survey sees Tesla investors ratifying Elon Musk’s 2018 comp plan

Morgan Stanley analyst Adam Jonas has reiterated his “Overweight” rating and $310 per share price target for electric vehicle maker Tesla (NASDAQ:TSLA). In his comments, the analyst discussed Tesla’s upcoming 2024 Annual Stockholders’ Meeting, as well as the potential results of the vote surrounding Elon Musk’s 2018 compensation plan. 

Earlier this year, Elon Musk’s 2018 CEO Performance Award was rescinded by a Delaware Judge, which resulted in Tesla asking its shareholders to ratify the 2018 compensation plan at the 2024 Annual Stockholders’ Meeting. The company has been putting in a lot of effort to encourage shareholders to vote for the ratification of Musk’s pay plan, as well as Tesla’s redomestication to Texas. 

The Morgan Stanley analyst, for his part, noted that Elon Musk likely needs Tesla now more than ever amidst the emerging AI industry. Jonas also noted that TSLA stock would likely see volatility due to the shareholder vote surrounding Musk’s 2018 CEO Performance Award. 

“We’ve encouraged investors to pay close attention to the June 13th shareholder vote due to its significance to the long-term strategic direction of the company. We believe that CEO Elon Musk needs Tesla now more than ever, as Al is a capital game – the broader collection of Elon Musk’s businesses may collectively invest many tens of billions of dollars in Al infrastructure in coming years, and cost of capital is deterministic for Al supremacy. 

The Morgan Stanley analyst noted that based on an investor survey that it conducted, it appears that TSLA shareholders will vote in favor of Musk’s compensation plan. Following is a summary of the results of Morgan Stanley’s survey, which was gathered from 109 respondents. 

“The majority of respondents (57%) expect Elon’s compensation package to be approved, outnumbering respondents who do not expect approval (23%) by more than 2:1. If Elon’s comp package is approved, majority (68%) expect Tesla stock price to react positively over the next three trading days (24% expect TSLA shares up 6-10%+, 44% expect TSLA shares up 3-5%, outnumbering those who expect the stock to be down upon approval by almost 6x.

“ If Elon’s comp package is approved, 20% expect a neutral stock price reaction (+/- 2%) over the subsequent three trading days, whereas if the comp package is not approved, only 7% expect a neutral stock price reaction. In the event that the package is not approved, the vast majority (81%) of respondents expect the stock price to be down, and 54% expect the stock to be down significantly (-6-10% or more),” the analyst wrote. 

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