Tesla Proxy Access

Tesla Proxy Access: Item 4 Presentation

Tesla Proxy Access, item #4

Tesla shareholders meet Tuesday, June 5, 2018, at 2:30 p.m. Pacific Time, at the Computer History Museum located at 1401 N. Shoreline Blvd., Mountain View, CA 94043.   In the interest of more accurate press coverage of Tesla Proxy Access, item #4, I (James McRitchie) am posting the text of my draft presentation on Tesla Proxy Access in advance.

Tesla is “shooting for the moon” and beyond. Shouldn’t we have a little insurance?

A cost-benefit analysis by CFA Institute, found proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption,” raising US market capitalization by $140 billion.  In other words, a vote in favor of the proposal is likely to raise the value of our stock. 

Two of our directors hold no stock in our company. (Robyn Denholm & Linda Johnson Rice) Why do they have such little confidence in our company? Proxy advisor Institutional Shareholder Services considers three of our directors to lack independence. (Antonio Gracias, Brad Buss, Kimbal Musk)

Whatever you think of our current board, isn’t it good to have insurance? In a time of crisis — and I don’t just mean our ongoing production crisis —  we could place two nominees on the proxy without going through an expensive proxy contest. Based on the proposal, any group putting forth nominees would have to have held $1.5B in Tesla stock continuously for 3 years. 

Between 2015 and 2017, a total of 206 proxy access proposals were voted. Average support exceeded 53% of votes cast. More than 60 percent of S&P 500 companies have adopted proxy access.

In its statement of opposition, the board points to a lack of safeguards — such as the ability of investors to use proxy access even if they have lent out shares, hold a short position, or intend a change of control. 

However, this proposal simply offers advice to the Board, subject to a 500-word limit. The Board is free to adopt a proxy access bylaw that includes restrictions on the use of proxy access — just as every other adopting company has done. 

Furthermore, the ability to include a director nominee in the company’s proxy does not guarantee election. Even if a “special interest” shareholder were to be placed on the ballot, that nominee would still need to win broad support to be elected.

Keep in mind that current officers and directors – who would presumably vote against any such nominee – own nearly 25 percent of outstanding shares. No shareholder nominee could win without the support of our largest investors — such as Fidelity, T. Rowe Price, Baillie Gifford, Tencent, Vanguard and BlackRock.

Vote FOR Tesla Proxy Access Item #4 — Insurance

For any analysis of all proxy issues, see Tesla 2018 Proxy Decisions Crucial.

   

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