Sustainable Finance Newsletter - T. Rowe Price's tough love for Tesla
By Ross Kerber
April 24 (Reuters) -Tesla last week trumpeted some supportive remarks it got from investor T. Rowe Price for the carmaker's $56 billion CEO pay package from 2018.
But a number of morecritical proxy votes T. Rowe Price has cast in corporate elections make the asset manager look like no rubber stamp for Tesla. Commentaries also showeddifferent T. Rowe Price funds taking different positions on Tesla's outlook, a diversity of viewpoints we're going to miss when index funds take over everything.
I wrote up T. Rowe Price's various points of view for this week's main story below. I've also included links to stories about a new U.S. rooftop solar plan and a look at Boeing's corporate culture.
You can connect with me on LinkedIn. If you have a news tip, potential content, or general thoughts you can also email me at ross.kerber@thomsonreuters.com
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T. Rowe Price's tough love for Tesla
In a preliminary proxy statement last week Tesla TSLA.O touted support from T. Rowe Price TROW.O for Elon Musk's record $56 billion pay package, including how the asset manager voted more than 99% of its shares in favor of the electric carmaker's CEO pay in 2018.
But Tesla didn't mention some more critical votes the Baltimore asset manager has cast or some toughly worded commentaries it has posted. T. Rowe Price's dissents show the nuances facing investors at Tesla's annual meeting on June 13.
A big issue is what to do about Musk's compensation. A Delaware judge in January voided the 2018 pay package as unfair to investors because it was negotiated by directors who appeared beholden to Musk.
In response, last week Tesla said it will hold a special vote to re-approve the pay and quoted supportive passages from a letter sent by T. Rowe Price, one of its largest investors.
T. Rowe Price told me that the pay showed "strong alignment" with investor interests. But T. Rowe Pricedeclined to specifically say how it would vote, or to release a full copy of its letter that it said also addressed "a range of governance topics."
A look at recent voting records shows how the firm may have had a lot more to say. While its funds including Blue Chip Growth Fund TRBCX.O and Growth Stock Fund PRGFX.O voted to electMusk as a Tesla director in 2023, they voted against Tesla Board Chair Robyn Denholm.
Blue Chip Growth and other funds also voted against the two Tesla directors up for election in 2022, Ira Ehrenpreis and Kathleen Wilson-Thompson. Denholm won support from 74% of votes cast and the other two won 64% and 68%, respectively, all relatively low levels for large company directors.
On its website T. Rowe Price said concerns about Tesla's classified board drove the critical votes against all three. In the case of Denholm, T. Rowe Price also wrote that "we do not support directors who have shown a pattern of failure to uphold shareholder interests."
In a separate 2022 stewardship report T. Rowe Price offered further concerns about Tesla's corporate governance. "Our concerns range across board independence, pledging of shares, time commitment of the founder, fair representation of shareholders’ interests, incentive structures, shareholder rights, risk management and investor communication, among others," the filing states.
T. Rowe Price declined to elaborate on either filing. Tesla did not respond to messages.
Fund commentaries from February show how different T. Rowe Price managers had different views about Tesla's outlook. The firm's U.S. Equity Research Fund PRCOX.O said it was underweight on Tesla, worried about oversupply of its vehicles amid higher interest rates.
But a fund commentary from Growth Stock Fund PRGFX.Owas more enthusiastic, calling Tesla "the lead disruptor" for electric vehicles and autonomous driving.
Company News
Top chipmaker and Apple supplier TSMC 2330.TW said second-quarter sales could rise as much as 30% on a wave of demand for semiconductors used in artificial intelligence applications.
Apple AAPL.O removed Meta Platforms' META.O WhatsApp and Threads from its App Store in China after being ordered to do so by the Chinese government, which cited national security concerns that were not immediately clear.
Years of prioritizing things like returning cash to shareholders mark a cautionary backdrop to Boeing's BA.N current troubles, writes Breakingviews columnist Robert Cyran. He notes a string of Boeing leaders came from General Electric GE.Nand its culture of ruthless cost-cutting.
On my radar
Please join us for a Reuters NEXT Newsmaker featuring Janet Yellen, U.S. Treasury Secretary, on Thursday April 25 at 10 a.m. ET / 1400 GMT. We’ll speak to Yellen about the crisis in the Middle East, lingering inflation pressures and other topics.
The U.S. is unveiling guidelines for using carbon offsets to build market confidence, Washington's top climate diplomat said, but the effort will have to convince skeptics after a row over offsets at a group that validates corporate climate targets.
A recent survey by The Conference Board and PwC found some executives frustrated with their boards, including that only 30% of executives rated their boards' performance as "excellent" or "good."
Reporting by Ross Kerber in Boston. Editing by David Gregorio.
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