Proxy measures opposed by Musk and board, offer clues to how the CEO really feels about shareholder rights, harassment, diversity and more.
Elon Musk, the chief executive of Tesla (TSLA) – Get Tesla Inc. Report, likes to present himself as a free-speech absolutist who supports robust debate about key issues.
But that tone shifts when things come closer to home, such as during the electric-vehicle maker’s annual meeting.
Tesla’s annual meeting, set for later this week, has a number of stockholder proposals up for votes, eight in fact.
They range from measures to boost shareholder proxy access, to reports on the board’s diversity, to supporting, or at least acknowledging, the rights to freedom of association and collective bargaining.
The one thing they all have in common, though, is that Musk and Tesla’s board oppose them.
Tesla’s Core Mission
Tesla put it this way in the company’s proxy statement:
“The Board continues to oppose initiatives that seek to direct Tesla’s strategic business decisions and day-to-day operations in ways that are not critical to or in furtherance of Tesla’s core mission.”
In addition: “The Board considers all reasonable stockholder viewpoints in good faith, but ultimately must consider the interests of all of our stockholders and what is best for sustainable value creation.”
To be sure, this is hardly surprising or unique to Musk or Tesla.
Corporations routinely oppose shareholder proposals. They are, after all, antithetical to the idea that corporate governance of the managers, by the managers and for the managers shall not perish from the Earth.
Tesla, however, is running into pushback from two key proxy-evaluation services that advise institutional investors on how to vote the shares they hold.
Tesla Faces Pushback
In the case of Tesla, both Institutional Shareholder Services and Glass Lewis are taking issue with the reelection of two members of Tesla’s board and urging votes in favor of six of the shareholder proposals, MarketWatch reported.
The opposition to the board members stems from their failure to implement a measure approved at last year’s shareholder meeting to create a single class of board members who would face reelection every year.
Currently, the board is divided into three staggered classes, with one of the three classes up for election each year.
Tesla has a measure on this year’s proxy to cut the board to two staggered classes, with each serving two years.
In a response filed with the SEC this week, Tesla wrote that “even though the 2021 Declassification Proposal was approved by a majority of the shares entitled to vote and present in person or represented proxy, such votes represented only 31.4% of the outstanding shares on the record date for such meeting and would thus have fallen far short of the supermajority threshold required to approve a proposal to amend our certificate of incorporation to effectuate a full declassification.”
As far as the proxy measures go, Glass Lewis and ISS are calling for shareholders to support shareholder proxy access; an annual report on efforts against harassment and discrimination; a report on Tesla’s lobbying efforts; a report on employee arbitration moves; reporting on water risks; and adopting measures regarding the company’s policy regarding collective bargaining.
They took no stand on proxy measures regarding annual reports on board diversity and child labor.
Tesla’s annual meeting is scheduled for August 4, 2022 at 4:30 U.S. Central Time.