4 ms·

Vanguard vote switch helped pass Tesla CEO Elon Musk's $56B pay package

9 points by 3pm 2y ago

3pm 2y ago
Does anyone know about BlackRock and State Street votes? But Vanguard, which has total assets of about $9 trillion, and other big index fund managers were always likely to be key to the vote. Representatives of Vanguard rivals BlackRock (BLK.N), and State Street (STT.N), declined to comment about their votes on Thursday.
constantcrying 2y ago
Huge vote of confidence for Musk. Also remember that Musk is paid in shares, the vote was whether he should get a significantly increased influence in Tesla. Curious what will happen to the court case. Can a court control a company against the repeated votes of share holders?
- 3pm 2y ago
  I guess the point here is that a huge percentage (7% just for Vanguard) of votes was not decided by the actual share holders. These shares are passively invested because Tesla is included in indexes like S&P 500. So the decision on the 7% of the votes was made by a few Vanguard execs. I'm not arguing for or against the decision, just stating the fact that it is much easier to convince a few Vanguard managers instead of 7% of the actual share holders.
  - constantcrying 2y ago
    Yes, but Vanguard is very large and has a significant interest in the success of Tesla. This certainly wasn't a decision they took lightly and their vote in favor of Musk shows that they have a significant amount of trust in him.
    - 3pm 2y ago
      For the record, Vanguard also has significant interest in the success of all Tesla competitors that are part of the index. Did Vanguard officially stated that they have "significant amount of trust in Musk"? They are not Cathy Woods.
      - constantcrying 2y ago
        >Vanguard also has significant interest in the success of all Tesla competitors that are part of the index. They don't really. They own GM and Ford stock, in smaller quantities, nothing from the other largest auto makers. Do you know something I am not aware of?
        3pm 2y ago
        Vanguard just tracks indexes. Indexes that include all publicly traded auto manufacturers in the world. E.g. Toyota: https://www.morningstar.com/funds/xnas/vtiax/portfolio https://www.morningstar.com/funds/xnas/vtiax/portfolio Most of Vanguard is a large bureaucracy with two goals: accurately track an underlying index and keep the cost low. They do have some actively managed funds but those are insignificant compared to their passive funds.
    - 3pm 2y ago
      I actually think that for VTSAX manages, the fact that they have to vote is sort of a liability for them. My guess is that they would rather not vote at all. They own the whole market anyway, and should only care about tracking the underlying index as accurate as possible with as low fees as possible, its bureaucratic. Now they have to publicly vote in a dubious popularity contest and take sides in a battle they don't care about.
    - 3pm 2y ago
      Interestingly enough, Vanguard voted against the package originally in 2018, and Black Rock voted for it (according to nytimes https://www.nytimes.com/2024/06/12/business/tesla-elon-musk-vote.html https://www.nytimes.com/2024/06/12/business/tesla-elon-musk-...) Tesla’s second-largest shareholder, Vanguard, voted against the pay deal in 2018. BlackRock, the third largest, voted for it. Both declined to say how they were voting this time.
- Zigurd 2y ago
  Can a court control a company against the repeated votes of share holders? Can a shareholder vote overturn a court decision? No. So what is the practical impact here? It doesn't change a board without outsiders, which was one problem with the pay package. It doesn't retrofit an arms-length negotiation, which was another problem. This isn't a new incentive agreement because crafting a replacement with the same outcome and same tax impacts is not possible. As far as I can tell Elon can't collect on the incentives, which also means shareholders take no hit on dilution, yet.
Glyptodon 2y ago
I saw this and have been trying to determine the best means of complaining to Vanguard about their vote.

9 points by 3pm 2y ago

3pm 2y ago

Does anyone know about BlackRock and State Street votes? But Vanguard, which has total assets of about $9 trillion, and other big index fund managers were always likely to be key to the vote. Representatives of Vanguard rivals BlackRock (BLK.N), and State Street (STT.N), declined to comment about their votes on Thursday.

constantcrying 2y ago

Huge vote of confidence for Musk. Also remember that Musk is paid in shares, the vote was whether he should get a significantly increased influence in Tesla. Curious what will happen to the court case. Can a court control a company against the repeated votes of share holders?

3pm 2y ago
I guess the point here is that a huge percentage (7% just for Vanguard) of votes was not decided by the actual share holders. These shares are passively invested because Tesla is included in indexes like S&P 500. So the decision on the 7% of the votes was made by a few Vanguard execs. I'm not arguing for or against the decision, just stating the fact that it is much easier to convince a few Vanguard managers instead of 7% of the actual share holders.
- constantcrying 2y ago
  Yes, but Vanguard is very large and has a significant interest in the success of Tesla. This certainly wasn't a decision they took lightly and their vote in favor of Musk shows that they have a significant amount of trust in him.
  - 3pm 2y ago
    For the record, Vanguard also has significant interest in the success of all Tesla competitors that are part of the index. Did Vanguard officially stated that they have "significant amount of trust in Musk"? They are not Cathy Woods.
    - constantcrying 2y ago
      >Vanguard also has significant interest in the success of all Tesla competitors that are part of the index. They don't really. They own GM and Ford stock, in smaller quantities, nothing from the other largest auto makers. Do you know something I am not aware of?
      - 3pm 2y ago
        Vanguard just tracks indexes. Indexes that include all publicly traded auto manufacturers in the world. E.g. Toyota: https://www.morningstar.com/funds/xnas/vtiax/portfolio https://www.morningstar.com/funds/xnas/vtiax/portfolio Most of Vanguard is a large bureaucracy with two goals: accurately track an underlying index and keep the cost low. They do have some actively managed funds but those are insignificant compared to their passive funds.
  - 3pm 2y ago
    I actually think that for VTSAX manages, the fact that they have to vote is sort of a liability for them. My guess is that they would rather not vote at all. They own the whole market anyway, and should only care about tracking the underlying index as accurate as possible with as low fees as possible, its bureaucratic. Now they have to publicly vote in a dubious popularity contest and take sides in a battle they don't care about.
  - 3pm 2y ago
    Interestingly enough, Vanguard voted against the package originally in 2018, and Black Rock voted for it (according to nytimes https://www.nytimes.com/2024/06/12/business/tesla-elon-musk-vote.html https://www.nytimes.com/2024/06/12/business/tesla-elon-musk-...) Tesla’s second-largest shareholder, Vanguard, voted against the pay deal in 2018. BlackRock, the third largest, voted for it. Both declined to say how they were voting this time.
Zigurd 2y ago
Can a court control a company against the repeated votes of share holders? Can a shareholder vote overturn a court decision? No. So what is the practical impact here? It doesn't change a board without outsiders, which was one problem with the pay package. It doesn't retrofit an arms-length negotiation, which was another problem. This isn't a new incentive agreement because crafting a replacement with the same outcome and same tax impacts is not possible. As far as I can tell Elon can't collect on the incentives, which also means shareholders take no hit on dilution, yet.

Glyptodon 2y ago

I saw this and have been trying to determine the best means of complaining to Vanguard about their vote.