Tesla Inc. and General Motors Co. face potential proxy battles next week at their annual shareholder meetings amid very different trajectories for their share price and investor expectations.
Meanwhile, GM is under pressure from David Einhorn’s Greenlight Capital to split the stock into two classes to create what Greenlight says would be “tens of billions of dollars” in shareholder value.
The companies are scheduled to hold their meetings on Tuesday, in Silicon Valley and in Detroit.
GM has rebuffed the idea, saying Greenlight’s proposal would be tantamount to a “high-risk financial engineering experiment,” one that would reduce the company’s flexibility and undermine progress without benefits for the shareholders.
Two influential shareholder proxy services, Institutional Shareholders Services Inc. and Glass Lewis & Co., have sided with GM in that regard.
For Tesla, the two proxy services have sided with the proposal to declassify the Tesla board structure, saying in essence that electing the members of the board of directors yearly, rather than in staggered three-year terms, would increase accountability.
Earlier this year, several institutional investors, including the Connecticut Retirement Plans and Trust Funds, sent a letter to Tesla asking the company to add two independent directors with no ties with Chief Executive Elon Musk, and to declassify its board.
Tesla has said staggered terms allow directors to focus on the long-term health of the company rather than short-term returns and share-price swings. Moreover, the decision to keep the staggered board structure has ushered “key decisions” that might have appeared counterintuitive to some, the company said in a filing.
Tesla shares have broken a string of intraday and closing records in the past two months. The stock reached an all-time high close on Wednesday, hitting $341.01. It traded as high as $344.88 intraday in the following session.
GM shares were on track Friday to snap a four-session winning streak, which included Thursday’s close of $34.43, the stock’s highest since late March. Shares are down about 16% from their all-time closing high of $41.53 in December 2013.
Tesla stock has gained nearly 60% this year, while GM shares have lost 1% in that same period. That compares with gains of nearly 9% for the S&P 500 index SPX, +0.37% and the Dow Jones Industrial Average DJIA, +0.29% has gained 7%.