Tesla faces a pressure campaign from activist investors.
Tesla investors on Thursday will vote on several proposals by activist investors who are trying to pressure the company and its CEO, Elon Musk, to change the way it treats employees, add an independent voice to the automaker’s board and reveal more about how it lobbies the government. Officer.
Tesla is widely credited with pioneering the electric vehicle market and putting the auto industry on a path to significantly reduce its greenhouse gas emissions. But the company was accused of racial discrimination at its California plant, the dissolution Union and having a group of people who are close to Mr. Musk. In May, the S&P 500 ESG Index removed Tesla from the list of companies that meet certain environmental, social and governance standards.
Daniel Ives, an analyst at Wedbush Securities, said: “Nobody doubts the historic, seismic achievements that Tesla and Musk have made.”
But he said investors were concerned about Musk’s aborted bid for Twitter, which added competition. Up in the electric car market, and production problems at Tesla. “Musk has been riding the magic carpet but you’re starting to see investor frustration,” Ives said.
In recent years, activist shareholders have increasingly tried to change the behavior of Tesla and other companies, in some cases with the support of large investors such as BlackRock and Vanguard. But the move caused opposition from conservative members of parliament and a number of company executives. Musk in May called ESG “Cruel deception.”
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While the overall auto market stagnates, the popularity of battery-powered vehicles is increasing worldwide.
The 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 opposed all eight resolutions. The proposal by the committee for a 3-1-1 stock split is expected to be widely supported by shareholders, and will make Tesla shares, which are currently trading at $900, easier for individuals and employees to purchase.
The shareholder resolution includes measures to ask Tesla to disclose more information about whether its government announcements are consistent with efforts to limit climate change. “Tesla is remarkably unethical when it comes to environmental, social, and governance-related disclosures,” said the resolution, which was filed by the Nathan Cummings Foundation and the Green Century Equity Fund.
Other resolutions asked Tesla to make it easier for shareholders to nominate candidates for the board, give more employees to pursue complaints in court and closely monitor whether the cobalt used in its batteries is mined using child labor.
The New York State General Retirement Fund, which administers the pension plan for state employees, has filed a resolution requiring administrators to submit an annual report on its efforts to prevent racial discrimination and sexual harassment. The California Department of Employment and Fair Housing sued Tesla in February after receiving what it said were hundreds of complaints from employees who said they were racially harassed, assigned physically demanding work and denied transfers and promotions.
In response to the resolution, Tesla said it “does not tolerate discrimination, harassment, retaliation or harassment of employees in the workplace or in work-related situations.”
Tesla maintains that its mission is to “accelerate the world’s transition to sustainable energy.” But shareholders have become critical of other aspects of the company and Mr. Musk’s behavior.
Many shareholder proposals are endorsed by the Institutional Shareholder Service, which advises large investors on how to vote at annual meetings. One proposal supported by the company, but opposed by Tesla management, would allow shareholders to nominate alternative candidates to the board.
Tesla often faces criticism that its board, whose members include Kimbal Musk, Elon Musk’s brother, cannot restrain the chief executive from doing or saying things that harm the automaker.
In response, Tesla said it has added more independent directors in recent years and that allowing shareholders to nominate members “could be exploited by corporate attackers.”
The shareholder proposal has received significant support in the past. Last year, 46 percent of shareholders voted in favor of a proposal challenging Tesla’s policy that requires employees to address discrimination and sexual harassment complaints to an arbitrator instead of in court. The resolution was filed by Nia Impact Capital in Oakland, California.
Last year, the New York chapter of the Sisters of the Good Shepherd filed a resolution demanding that Tesla disclose the human rights impact of its operations.
Kristin Hull, chief executive officer of Nia Impact Capital, said activist investment firms like her are at the forefront of confronting Tesla’s management while large, influential institutional shareholders have been on the ground.
“It’s smaller asset managers and asset managers led by women and women who are leading the way,” Ms Hull said. Major shareholders, she said, “just have to pick up the phone.”