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Tesla shareholders face staggering new hurdle after company enacts controversial policy: 'A formidable barrier'

Tesla shareholders face staggering new hurdle after company enacts controversial policy: 'A formidable barrier'

Yahoo7 hours ago

Tesla raised the bar for shareholders to sue the company board or executives for breach of fiduciary duties.
The change took effect May 15 and requires an investor or group of investors to hold 3% of the electric vehicle maker's stock "to institute or maintain a derivative proceeding," CNBC reported. Tesla's market cap is $1.123 trillion, so a plaintiff would have to own shares worth $33.7 billion.
"Obviously, for a company of Tesla's size, that would be a formidable barrier to anyone bringing a lawsuit for breach of fiduciary duty," Tulane Law School's Ann Lipton told CNBC in an email.
The change was enabled by a Texas law that "allows corporations to limit shareholder lawsuits against insiders for breach of fiduciary duty," the outlet added. With shareholder approval, Tesla moved its incorporation site from Delaware to the Lone Star State in June 2024.
An investor who owned nine shares of Tesla stock sued the company in 2018, and CEO Elon Musk's $56 billion compensation package was revoked in January 2024.
Musk is by far the richest person on the planet, and his wealth makes him nearly untouchable. He helped to pioneer the EV movement by becoming an early investor in Tesla in 2003, and the company has been known for innovative technology and industry-leading breakthroughs.
Recently, however, the South African has drawn criticism for straying into American and European politics, including spending lavishly on the U.S. presidential election campaign of Donald Trump, leading government spending cuts as the head of the U.S. Department of Government Efficiency, and supporting the far-right Alternative for Germany party.
Activists have protested these actions, and Tesla charging stations, vehicles, and dealerships have been vandalized. Sales have plummeted, and Tesla stock spiraled downward, too, though it has regained much of its value.
This upheaval and the larger perception change of Musk from groundbreaker to villain could stifle the uptake of EVs, which is one of the many things necessary to slow the rapid rise of global temperatures caused by the burning of fossil fuels for energy.
It would take a massive coalition of shareholders to fight back against this move by Tesla, though companies are generally amenable to public pressure — especially when it comes to consumers' spending power. Tesla, for example, is shifting its focus from EV manufacturing to a robotaxi service and robotics to stabilize its future.
Musk has a history of not delivering on outlandish promises, but it has not significantly slowed the company or deterred its supporters.
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'Musk Must Fall': Nationwide Protest to Take Place on Elon Musk's Birthday
'Musk Must Fall': Nationwide Protest to Take Place on Elon Musk's Birthday

Newsweek

time11 minutes ago

  • Newsweek

'Musk Must Fall': Nationwide Protest to Take Place on Elon Musk's Birthday

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Mass protests across the country are being scheduled for Tesla CEO Elon Musk's birthday on June 28, led by the Tesla Takedown movement. Despite no longer being part of the government, Musk's Department of Government Efficiency (DOGE) policies and his continued impact as a private citizen are still being felt across the country, from mass governmental layoffs to his involvement in running companies with large government contracts. The "Musk Must Fall" protests are planned for cities across the country, including in "red" states of Texas, Missouri, Georgia, and Ohio, with the Tesla Takedown team saying: "And our birthday gift to the Broligarch in Chief? A global party with one powerful message: Musk Must Fall." Tesla has been contacted via email for comment. New Yorkers gathered outside the Tesla dealership in the Meat Packing district in Manhattan to protest against Elon Musk and his actions with DOGE, 3/29/25. New Yorkers gathered outside the Tesla dealership in the Meat Packing district in Manhattan to protest against Elon Musk and his actions with DOGE, 3/29/25. Andrea Renault/STAR MAX/IPx Why It Matters Musk retains a lot of power over global politics as he is capable of endless donations to political parties and aiding in message amplification as the owner of X (formerly Twitter). According to public polls, he was an unpopular member of the Trump administration and, since leaving, has been in a public feud with President Donald Trump. Despite some political commentators recommending that Democrats try to win Musk and his billions over to their side, these protests show that Musk is still a deeply unpopular figure in American politics. What To Know Tesla Takedown protest in New York, March 29, 2025. Tesla Takedown protest in New York, March 29, 2025. Andrea Renault/STAR MAX/IPx Protests are planned for June 28 in 15 states: Virginia, California, Washington, Florida, Colorado, New Mexico, Nevada, Georgia, Maryland, Minnesota, Oregon, Texas, Idaho, Ohio, Missouri, as well as the District of Columbia. There are also protests planned overseas in the UK. These protests come amid a social media spat between President Trump and Musk. Musk has accused Trump of not being able to win the election without him, and Trump has threatened to pull government money for Musk's companies, such as SpaceX and Starlink. The Tesla Takedown team disputes the idea that Musk is no longer part of the current administration, saying: "Elon is still deeply tied to the Trump regime, still fueling conspiracies and fascist rhetoric, and still using his immense wealth to warp government policy and buy elections around the globe." These protests have been occurring outside of Tesla showrooms since Trump was inaugurated on January 20. Tesla Takedown is a non-violent movement and is not related to incidents in the U.S. where some Tesla cars and dealerships have been vandalized. The Trump administration has said that Tesla vandalism is "domestic terrorism," and the FBI has launched a task force to target attacks on Teslas and their dealerships. What People Are Saying Tesla Takedown: "On June 28—Elon's birthday—let's celebrate everything we've achieved and recommit to the long fight still ahead." An FBI spokesperson told Newsweek for a previous article: "The FBI is committed to protecting the U.S. from many threats including terrorism, violent crime, drug trafficking, and cyberattacks. We will continue to work closely with our law enforcement partners here in the U.S. and internationally to detect and counter potential dangers. All our work is focused on providing safer communities for our citizens every day." What Happens Next The protests will take place on June 28. Other anti-Trump protests are planned for June 14, Trump's birthday.

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