Tesla 2022 annual meeting is August 4, 2022, at 2:30 am Pacific. It is hybrid, both live and virtual, on the Computershare platform. Of course, I recommend voting in advance, especially since they make it difficult to vote at the meeting and maybe even to enter. Enhance corporate governance and long-term value. Vote Against both directors, 2-year terms, and the auditor. Vote FOR all other items.
I also recommend participating in the Tesla 2022 Shareholder Meeting Preview.
Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. Below, is how I voted and why.
Tesla 2022: ISS Rating
From the Yahoo Finance profile page: Tesla, Inc.’s ISS Governance QualityScore as of July 1, 2022, is 10. The pillar scores are Audit: 8; Board: 9; Shareholder Rights: 10; Compensation: 10.
Corporate governance scores courtesy of Institutional Shareholder Services (ISS). Scores indicate decile rank relative to index or region. A decile score of 1 indicates lower governance risk, while a 10 indicates higher governance risk. Tesla’s scores virtually scream governance risk.
Tesla 2022: CorpGov Recommendations
|1.1||Elect Director Ira Ehrenpreis|
Vote AGAINST Ira Ehrenpreis and Kathleen Wilson-Thompson, given concerns about the board’s risk oversight in light of the pledging of a significant amount of the company’s stock; given the board’s insufficient responsiveness to a majority-supported shareholder proposal; given failure to proficiently ESG risks; and given that less than 50% of the board is gender diverse and less than 40% of the board is diverse (includes just racial/ethnic diversity). Both ISS and Glass Lewis recommend Against.
|1.2||Elect Director Kathleen Wilson-Thompson|
|2||Reduce Director Terms from Three to Two Years|
Vote Against. The reduction from a three-class to a two-class board structure, while falling short of full declassification, represents an improvement in board accountability. However, it will also make moving to an unclassified board more difficult if this halfway measure is adopted and runs counter to the vote of my successful shareholder proposal on this topic last year. Therefore, I voted Against. Both ISS and Glass Lewis recommend Against, as does Egan-Jones.
|3||Eliminate Supermajority Voting Provisions|
Support resolutions to reduce supermajority vote requirements to increase accountability.
|4||Increase Authorized Common Stock|
The increase in authorized common stock is proportionate to the board’s proposed 3-for-1 stock split and the company’s share price has increased significantly in the past two years. However, Tesla has not disclosed whether successive increases would be carried out with or without pre-emptive rights. As such, the aggregate authority may exceed recommended limits for issues with or without pre-emptive rights. Abstain.
|5||Ratify PricewaterhouseCoopers LLP as Auditors|
Yes, less than 25% of total audit fees paid are attributable to non-audit work. However, PricewaterhouseCoopers has been Tesla’s auditor for 17 years, so should be considered less than fully independent.
|6||Adopt Proxy Access Right|
Vote FOR. Adoption of proxy access will enhance shareholder rights. This is my proposal. See more below.
|7||Report on Efforts to Prevent Harassment and Discrimination in the Workplace|
Vote FOR. The company has faced recent attention for allegations of harassment and discrimination in the workplace. Increased transparency would help shareholders assess how Tesla is managing associated risks.
|8||Report on Racial and Gender Board Diversity|
Vote FOR. Shareholders would benefit from additional information about how the company is ensuring gender and minority representation are included in the company’s board nomination process.
|9||Report on the Impacts of Using Mandatory Arbitration|
Vote FOR. More information on the impact Tesla’s standard arbitration provision has on employees would allow shareholders better evaluate risks related to several recent controversies. A report may bring information to light that could result in improved recruitment, development, and retention.
|10||Report on Corporate Climate Lobbying in line with Paris Agreement|
Vote FOR. An evaluation of how Tesla’s lobbying activities align with Paris Agreement goals would allow shareholders to better evaluate the company’s risk related to its lobbying activities.
|11||Adopt a Policy on Respecting Rights to Freedom of Association and Collective Bargaining|
Vote FOR. This policy may benefit shareholders by improving management of related risks. The company already has a similar policy in place for its suppliers.
|12||Report on Eradicating Child Labor in Battery Supply Chain|
Vote FOR human rights risk assessment. Not just reputational risk but the right thing to do.
|13||Report on Water Risk Exposure|
Vote FOR. Not just reputational risk but the right thing to do.
Tesla 2022: Proxy Access
Tesla’s opposition statement says the Board recognizes proxy access is a topic of growing interest in the investor community. Unlike 79% of the S&P 500, our Board has failed to adopt any provision to provide shareholders with a real voice in directly nominating board members — our representatives in Tesla’s corporate governance. Instead, the Board promises to continue to monitor the topic.
Tesla further argues our proposal provides no safeguards against corporate raiders to effect a change of control. Nonsense. Our proposal is limited by law to 500 words. It simply asks the Board to allow long-term shareholders who have owned at least 3% of Tesla continuously for 3 years or more to be able to nominate directors. Nothing in the proposal is binding. If passed, it is up to the Board to add necessary safeguards, as boards have done at hundreds of companies with proxy access.
Getting more than 50% of the shareholder vote may mean little at Tesla. Our proposal to eliminate supermajority requirements at Tesla won 56% of the vote at our 2020 meeting, yet we are still voting on it this year. Are insiders at Tesla voting to block adoption? Our proposal to declassify the Board won 55% at the 2021 meeting. Yet, the Board now wants a halfway measure. How large of a majority is required to move our Board to action? Because of the Board’s halfway measure, proxy advisors ISS and Glass Lewis recommended against the directors up for election at this meeting and against the halfway measure toward declassifying the Board.
As stated in the proposal, two of our largest shareholders, BlackRock and Vanguard, voted in favor of 87% and 91% of shareholder proposals to establish proxy access during the last 3.5 years. Proxy advisors ISS, Glass Lewis, and Egan-Jones all recommend a vote For. Cut the bull. Give shareholders a direct voice in nominating directors. Vote For Proposal #6. Proxy access is long overdue.
In looking up funds in our Shareowner Action Handbook, I see several have reported their votes.
Tesla 2023: Issues for Future Proposals
Looking at insightia for anti-shareholder provisions:
- A director may be removed from office by the stockholders of the corporation only for cause (illegal activity)
- No requirement for an independent chair
- Classified board
- Shareholders cannot take action by written consent or call a special meeting
- Supermajority requirements
- No shareholder right to proxy access
Tesla 2023: Mark Your Calendar
In order to be included in the proxy statement for the 2023 annual meeting of stockholders, stockholder proposals must be received in accordance with the above instructions no later than the 120th day preceding the one-year anniversary on the date on which this proxy statement is released to the Company’s stockholders, or February 23, 2023, provided that if the date of the 2023 annual meeting of stockholders is more than 30 days from the one-year anniversary of the 2022 Annual Meeting, the deadline will instead be a reasonable time before we begin to print and send our proxy materials for the 2023 annual meeting of stockholders. In addition, stockholder proposals must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).