In a recent development, activist investors are leveraging a court ruling that could potentially reshape Tesla Inc.’s (NASDAQ:TSLA) corporate governance, potentially curtailing Elon Musk’s influence.
What Happened: A Delaware judge’s decision to nullify Musk’s approximately $56 billion stock compensation plan has emboldened activist investors to push for more significant governance changes at Tesla, reported Reuters. This ruling could catalyze reformers to gain support from major index funds and other investors.
These investors have been advocating for corporate governance changes at Tesla’s annual shareholder meetings, such as director term lengths and voting thresholds for new bylaws. Despite their efforts, they have seen little success in effecting change.
A resolution proposed by independent activist investor John Chevedden at Tesla’s upcoming shareholder meeting aims to replace the requirement for major corporate changes to gain support from two-thirds of all shares outstanding with a simple majority vote.
With the judge’s ruling questioning the board’s independence, these activists hope to garner more support from major index funds and other investors to sway shareholder votes in their favor.
Read Next: If You Invested $1,000 In Tesla Stock When Elon Musk's Compensation Plan Was Announced
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