Tesla faces a pressure campaign from activist investors.

Tesla investors will vote Thursday on several proposals from activist investors who seek to pressure the company and its chief executive, Elon Musk, to change how they treat workers, add more independent voices to the board from the automaker and disclose more about how it is lobbying the government. officials.

Tesla is widely credited with pioneering the electric car market and setting the auto industry on the right track to drastically reduce its greenhouse gas emissions. But the company has been accused of racial discrimination at its California plant, fighting unions and having a board full of people close to Mr Musk. In May, the S&P 500 ESG Index removed Tesla from a list of companies that meet certain environmental, social and governance standards.

“No one doubts the historic seismic achievements of Tesla and Musk,” said Daniel Ives, analyst at Wedbush Securities.

But he said investors were worried about Mr Musk’s failed bid on Twitter, growing competition in the electric vehicle market and production problems at Tesla. “Musk had a magic carpet ride, but you’re starting to see some frustration among investors,” Mr Ives said.

In recent years, shareholder activists have worked to change the behavior of Tesla and other companies, in some cases with support from big investors like BlackRock and Vanguard. But the move prompted a backlash from conservative lawmakers and some business executives. Mr. Musk in May called ESG “an outrageous scam.”

Activist investor groups have submitted eight nonbinding proposals that will be voted on at Tesla’s annual meeting on Thursday afternoon at the company’s factory in Austin, Texas. Last year there were five such proposals.

Tesla management opposes all eight resolutions. A board proposal for a 3-for-1 stock split is expected to garner broad support from shareholders and will make it easier to buy Tesla shares, which currently trade at more than $900, for investors. individuals and employees.

The shareholder resolutions include a measure that would require Tesla to disclose more information about its government lobbying’s compliance with efforts to limit climate change. “Tesla is a notable laggard in environmental, social and governance-related disclosure,” said the resolution, which was submitted by the Nathan Cummings Foundation and the Green Century Equity Fund.

Other resolutions called on Tesla to make it easier for shareholders to nominate board nominees, give employees more leeway to file suits in court, and more closely monitor whether the cobalt used in its batteries is mined. using child labor.

The New York State Common Retirement Fund, which administers the state employee retirement plan, filed a resolution asking management to file an annual report on its efforts to prevent racial discrimination and sexual harassment. The California Department of Fair Employment and Housing sued Tesla in February after receiving what it said were hundreds of complaints from employees who said they were racially slurred, assigned to physically strenuous work and denied transfers and promotions.

In a response to the resolution, Tesla said it “does not tolerate discrimination, harassment, retaliation, or any mistreatment of employees in the workplace or in work-related situations.”

Tesla says its mission is “to accelerate the global transition to sustainable energy.” But shareholders have become increasingly critical of other aspects of the company’s behavior and of Mr. Musk.

Several shareholder proposals have been approved by Institutional Shareholder Services, which advises large investors on how to vote at annual meetings. A proposal backed by the company, but opposed by Tesla management, would allow shareholders to nominate other nominees to the board.

Tesla has often come under criticism that its board, whose members include Elon Musk’s brother Kimbal Musk, has been unable to stop the chief executive from making or saying things. things that harm the automaker.

In a response, Tesla said it had added more independent directors in recent years and that allowing shareholders to appoint members “could be exploited by corporate looters.”

Shareholder proposals have received significant support in the past. Last year, 46% of shareholders voted in favor of a proposal challenging a Tesla policy that requires employees to resolve discrimination and sexual harassment complaints before an arbitrator rather than in court. The resolution was filed by Nia Impact Capital in Oakland, California.

Last year, the New York chapter of the Good Shepherd Sisters filed a resolution asking Tesla to disclose the impact of its operations on human rights.

Kristin Hull, managing director of Nia Impact Capital, said activist investment firms like hers were stepping up to take on Tesla management while large institutional shareholders, with much more clout, stayed back.

“It’s the smaller asset managers and the women-led asset managers and the nuns who are running this,” Ms Hull said. Big shareholders, she said, “just pick up the phone.”


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