Tesla 2024 Proxy Votes - Declassify Board - Kimball Musk & James Murdoch

Tesla 2024 Proxy Votes

Tesla 2024 Proxy Votes. James McRitchie’s Proposal for the annual election of all directors is one of several items to be voted on before or during the Tesla (TSLA) annual meeting on June 13, 2024, at 1:30 a.m. Pacific time. Attend the annual meeting online or in person. I suggest you vote in advance. However, you can also vote during the meeting with your control number IF voting isn’t cut off right after all proposals have been presented.

Vote  FOR #6 Reduction of Director Terms to One Year (Declassify the Board of Directors) and other items as indicated below. Note: If you vote online and leave blanks, those blanks will be filled in, not as abstentions, but as if you had voted as theBoardd recommends. That’s not exactly democratic corporate governance.

I voted with 8% of theBoard’ss recommendations. You can view the Proxy Statement via the SEC’s EDGAR system (look for DEF 14A) or on LEXexamples or CapEdge, which offer many free tools.

Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, as well as energy generation and storage systems in the United States, China, and internationally.

The Shareholder CommonsRead Warnings. Good corporate governance generally results in better profits and a better society. However, I don’t prioritize profits over our natural environment and human needs, especially when companies externalize costs. (see The Shareholder Commons) I take a systems approach.

Tesla 2024 ISS Rating

Tesla, Inc.’s ISS Governance QualityScore as of June 1, 2024, is 10. The pillar scores are Audit: 7; Board: 9; Shareholder Rights: 9; Compensation: 10. That’s about as bad as I have ever seen. 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 2024: How We Voted

ItemEgan-Jones RecommendationCorpGov.net Votes
1A-1B – Election of DirectorsFOR ALLAGAINST ALL
2 – To Approve a Non-binding Advisory Proposal on Executive CompensationFORAGAINST
3 – Tesla Proposal to Approve the Redomestication of Tesla from Delaware to Texas by ConversionFORAGAINST
4 – Tesla Proposal to Ratify the 100% Performance-Based Stock Option Award to Elon Musk That Was Proposed to and Approved By the Stockholders in 2018FORAGAINST
5 – Ratification of the Appointment of Independent AuditorsAGAINSTFOR
6 – Shareholder Proposal Regarding Reduction of Director Terms to One YearFORFOR
7 – Shareholder Proposal Regarding Simple Majority Voting Provisions in the Governing DocumentsFORFOR
8 – Shareholder Proposal Regarding Annual Reporting on Anti-Harassment and Discrimination EffortsFORFOR
9 – Shareholder Proposal Regarding Adoption of a Freedom of Association and Collective Bargaining PolicyFORFOR
10 – Shareholder Proposal Regarding Reporting on Effects and Risks Associated with Electromagnetic Radiation and Wireless TechnologiesAGAINSTFOR
11 – Shareholder Proposal Regarding Adopting Targets and Reporting on Metrics to Assess the Feasibility of Integrating Sustainability Metrics into Senior Executive Compensation PlansAGAINSTFOR
12 – Shareholder Proposal Regarding Committing to a Moratorium on Sourcing Minerals from Deep Sea MiningFORFOR

Tesla 2024: Considerations and RecommendationsDiligent logo

Diligent has the best suite of tools for looking up voting records and bylaw characteristics, determining how vulnerable companies are on what issues, deciding what proposals might be most productive, etc. I was helped with my voting advice from Egan-Jones and my proxy voting policy through iconikapp. Some funds announced their votes in advance.

Egan-Jones

Free Proxy Advisor From As You Sow & IconikappSign up for the iconik/AYS app to automate voting for all your proxies according to human values. In about two minutes, you’ll vote for all your proxies according to values that balance environment, social, governance, and profitability. More information is available at Free Proxy Advisor From As You Sow & Iconikapp. I have a more customized version, so your results with iconikapp.com may differ. I am also beginning to look more at the coverage provided by Free Float Analytics. They did an excellent job of reviewing the big vote at Tesla. Free Float AnalyticsIconikapp

Tesla 2024: Directors

I voted Against James Murdoch and Kimball Musk, who face conflicts of interest. James Murdoch, the son of media mogul Rupert Murdoch, has been a friend of Elon Musk since 2006. He joined Tesla’s Board of directors in 2017 after being approached by Antonio Gracias, another close associate of Elon Musk.

Murdoch has vacationed with Elon Musk and his family in various locations, including the Caribbean, Jerusalem, and Mexico. This close friendship has led to concerns about Murdoch’s ability to provide independent oversight of Elon Musk’s actions as CEO.

Kimbal Musk, Elon Musk’s younger brother, has been involved in several business ventures with Elon, including co-founding Zip2 and being an early investor in X.com, which later became PayPal. Kimbal is also a significant shareholder in Tesla and serves on its Board of directors. The two brothers have a long history of working together and share a close personal bond. Kimbal has been described as having a significant influence on Elon, and their close relationship has similarly raised concerns about his ability to oversee Tesla’s management independently.

Tesla 2024: Board Items #2-5

I voted along with the NYC Comptroller AGAINST the pay package for named executive officers.

Vote AGAINST reincorporation from Delaware to Texas since it is likely to dilute the rights of shareholders.

Vote AGAINST the $56B bonus to Elon Musk, which the Delaware Court of Chancery previously struck due to several critical reasons related to breaches of fiduciary duties and conflicts of interest. Those issues have not been resolved. ISS and Glass Lewis both recommend against it. One reason for the bonus was to focus Musk’s divided attention on Tesla rather than his other ventures, such as SpaceX, Neuralink, the Boring Company, and X (formerly Twitter). That hasn’t happened. Since April 14, 2022, when Musk offered to buy Twitter, the Nasdaq has gone up 28%. The price of Tesla stock has gone down 46%.

Tesla v Nasdaq 2024-06-07

                                                                                  Tesla v Nasdaq 2024-06-07

Tesla’s total cumulative profit since inception through Q1 2024 amounts to approximately $36B. $56B would extract more than all Tesla’s profits since its inception. Removing $56B from Tesla will likely decrease R&D, production build-out, and the ability to compete with other companies. Additionally, Mr. Musk seems likely to use the bonus to expand the capabilities of his other ventures instead of Tesla.

Tesla launched a website, started paying for advertising, and is raffling a factory tour with Elon Musk to rally retail support. Roughly 44% of Tesla’s common stock is held by non-professional shareholders. Can they be swayed by a chance to get close to Elon Musk? I hope they are swayed by what’s best for the Company, not the possibility of meeting the richest person in the world.

Vote For the Auditor. Egan-Jones notes that, over time, many are essentially captured. They are troubled when a company contracts with the same firm for over seven years. Tesla’s auditor has been PricewaterhouseCoopers LLP for 16 years. That’s on the borderline for me, but not as serious as the items I oppose.

Tesla 2024: Item #6 Declassify the Board of Directors and Other Shareholder Proposals

Item #6

James McRitchie, the publisher of CorpGov.net, submitted this Proposal. When we presented a similar proposal to shareholders in 2021, 55% supported it. At that time, the Board undermined our proposal by putting up a competing proposal, accountability every other year. Neither received the required vote of 67% of shares owned, as required in the bylaws. The vast majority of institutional shareholders will again support our proposal. Ninety percent of the S&P 500 have a declassified board so that directors can be evaluated by shareholders yearly, promoting good governance through accountability.

The real question is whether or not retail shareholders (holding 44% of shares) will vote in favor. Matt Moscardi of Free Float Analytics, which bills itself as taking a Moneyball approach to boards of directors, notes: “It’s time to get a professional board, but it won’t happen without declassifying and simple majority. James McRitchie‘s proposal 6 is the most important vote of the year and, coupled with proxy access, allows investors NEXT year to reconstitute board skills and professionalism through slates.” John Cheveddan’s simple majority vote is the other crucial vote. Re-ratifying pay and domesticating in Texas get headlines, but declassifying the Board is the biggest issue.” Listen to the podcast. The board’s overall failure to stand up to Musk has expanded into a problematic culture within the board and its nominating committee. Three directors are his friends (his besties), and one is his brother. Others, such as James Murdoch, are invested in Musk’s other ventures such as SpaceX.

The Delaware case identified three deficiencies: directors were not independent, the facts of the pay plan presented to investors were misleading, and the board failed to negotiate the pay package with Musk. A major part of the cure is declassifying the board, allowing shareholders to nominate and elect independent directors. I like the logic of Free Float’s analysis, which boils down to the following: The “Musk premium” is eroding. Tesla is Musk’s liquid piggy bank. His other companies are not. “Musk is leaving no matter what you do. Either he sticks around a little while, long enough to keep using shareholder capital to fund his other ventures or until he gets totally bored, OR he leaves immediately if shareholders reject his pay and turn off the piggy bank.” It’s time to bite the bullet and be prepared for a future that isn’t based on a superhero dictatorship. Tesla must get ready to transition from a board dominated by friends and family and some financial expertise to one of independent directors with engineering, software, and product development expertise.

Other Shareholder Proposals

My votes at Tesla this year are the same as those announced by Nell Minow a month ago. Minow is Vice Chair of ValueEdge Advisors and co-founded GMI Ratings and its predecessor, The Corporate Library. She was a principal at Lens, an investment firm focused on shareholder activism, and as President of Institutional Shareholder Services. Minow has been dubbed “the queen of good corporate governance” by BusinessWeek and “the CEO Killer” by Fortune. She has authored over 200 articles and co-authored several books on corporate governance, including the widely used textbook Corporate Governance.

We are voting Against every board proposal except the auditor and For every shareholder proposal. A couple of the shareholder proposals are new to most analysts. They deserve your vote today so the proposals can be returned next year after the company and proxy advisors have more fully analyzed them.  However, this year’s most essential shareholder proposals are #6 and #7. Declassify the board so we can hold directors accountable every year, and lower the voting threshold on all items to a simple majority of votes cast so shareholders and the board can remove the straight-jacket that binds our bylaws to the past.

If you have not voted For this critically important proposal to declassify the board, please do so now, before the polls are closed. Vote FOR item #6.

Tesla 2025: Mark Your Calendar

For inclusion in Tesla’s proxy materials — Stockholders may present proper proposals for inclusion in Tesla’s proxy statement and for consideration at the next annual meeting of stockholders by submitting their proposals in writing in a timely manner to:

Tesla, Inc.
1 Tesla Road
Austin, Texas 78725
Attention: Legal Department — Shareholder Mail

with a copy sent by e-mail to shareholdermail@tesla.com.

Any correspondence that is not addressed precisely in accordance with the foregoing, including any correspondence directed to a specific individual, may not be received timely or at all, and we strongly recommend that you also send such correspondence by e-mail and verify that you receive a confirmation of receipt from Tesla. In order to be included in the proxy statement for the 2025 annual meeting of stockholders, stockholder proposals must be received in accordance with the above instructions no later than December 17, 2024, provided that if the date of the 2025 annual meeting of stockholders is more than 30 days from the one-year anniversary of the 2024 Annual Meeting, the deadline will instead be a reasonable time before we begin to print and send our proxy materials for the 2025 annual meeting of stockholders. In addition, stockholder proposals must otherwise comply with the requirements of Rule 14a-8 of the Exchange Act.

   

Tesla 2024: Related Posts

RCV in Corporate Elections: Tesla?

Tesla 2022 Proxy Score 7

Tesla 2020 Simple Majority Vote

Musk Steps Down as Tesla Chairman

Tesla Motors: Proxy Score 100

 

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