Tesla investors will vote Thursday on several proposals from activist investors seeking to pressure the company and its CEO Elon Musk to change how it treats workers, add more independent voices to the automaker’s board and disclose more about how it lobbies the government. Officials.
Tesla is widely credited with pioneering the electric car market and setting the auto industry on a path to significantly reduce its greenhouse gas emissions. But the company has been accused of racial discrimination at its California plant, crushing unions and a board of people close to Mr Musk. In May, the S&P 500 ESG Index removed Tesla from its list of companies that meet certain environmental, social and governance standards.
“No one doubts the seismic historic achievements that Tesla and Musk have made,” said Daniel Ives, an analyst at Wedbush Securities.
But he said investors were concerned about Mr. Musk’s aborted bid for Twitter, growing competition in the electric car market and production problems at Tesla. “Musk has walked the magic carpet, but you start to get disillusioned among investors,” Mr. Ives said.
In recent years, activist shareholders have increasingly sought to change the behavior of Tesla and other companies, in some cases with the support of major investors such as BlackRock and Vanguard. But the move drew backlash from conservative lawmakers and some corporate executives. Mr. Musk called ESG in May “Outrageous Fraud.”
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An activist investor group submitted eight non-binding proposals that will be voted on at Tesla’s annual meeting Thursday afternoon at the company’s plant in Austin, Texas. Last year there were five such proposals.
Tesla management opposes all eight resolutions. The board’s proposal for a 3-to-1 stock split is expected to garner broad shareholder support and make it easier for individuals and employees to buy Tesla shares, which currently sell for more than $900.
The shareholder resolution includes a measure asking Tesla to disclose more information about whether its government lobbying is consistent with efforts to curb climate change. “Tesla is a notable laggard when it comes to environmental, social and governance-related disclosures,” said the resolution, filed by the Nathan Cummings Foundation and Green Century Equity Fund.
Other resolutions asked Tesla to make it easier for shareholders to nominate candidates to the board, give employees more leeway to pursue lawsuits and more closely monitor whether the cobalt used in its batteries comes from child labor.
The New York State Common Retirement Fund, which manages the state employee pension plan, has filed a resolution asking management to submit an annual report on racial discrimination and sexual harassment. The California Department of Fair Employment and Housing sued Tesla in February after receiving hundreds of complaints from employees who said they were racially abused, given physically demanding work and denied transfers and promotions.
In response to the resolution, Tesla said it “will not tolerate discrimination, harassment, retaliation or any mistreatment of employees in the workplace or in work-related situations.”
Tesla claims its mission is to “accelerate the world’s transition to sustainable energy.” But shareholders are increasingly critical of other aspects of the company and Mr. Musk’s behavior.
Several shareholder proposals were approved by Institutional Shareholder Services, which advises large investors on voting at annual meetings. One proposal, supported by the firm but opposed by Tesla management, would allow shareholders to nominate alternative candidates to the board.
Tesla has often faced criticism that its board, which includes Kimbal Musk, Elon Musk’s brother, has failed to stop the CEO from saying things that hurt the automaker.
In response, Tesla said it had added more independent directors in recent years and that shareholders’ power to nominate members “could be used by corporate raiders.”
Shareholder proposals have received significant support in the past. Last year, 46 percent of shareholders voted in favor of a proposal challenging Tesla’s policy requiring employees to resolve discrimination and sexual harassment claims before an arbitrator rather than in court. The resolution was filed by Nia Impact Capital in Oakland, California.
Christine Hull, chief executive of Nia Impact Capital, said activist investment firms like hers are leading the way in challenging Tesla’s management, while large institutional shareholders, with far more influence, are lagging behind.
“It’s small asset managers and women-led asset managers and nuns who are leading it,” Ms Hull said. Large shareholders, he said, “just need to pick up the phone.”