Tesla Inc. shareholders are about to size up some big names who’ll decide the future of the carmaker’s governance, which has long been a sore subject because of Chief Executive Officer Elon Musk’s penchant for running many companies and sparring with regulators.
When investors vote at the annual meeting scheduled to get underway at 3 p.m. local time in Austin, the biggest ballot items involve a push for clearer succession planning, the reelection of non-executive Chair Robyn Denholm and the nomination of former Chief Technical Officer JB Straubel to Tesla’s eight-member board of directors. Straubel, a Tesla co-founder who spent 14 years at the company, left in 2019 and has been heading battery-recycling startup Redwood Materials Inc. Musk is also is up for reelection.
The meeting comes at a crucial time for Tesla and Musk. The company has been building inventory and cutting prices, which has compressed profit margins while helping to sustain slowing sales growth. At the same time, some shareholders have been voicing dissatisfaction about the level of attention Musk is paying to the company. The biggest of his other enterprises are SpaceX and Twitter, which he acquired in October for $44 billion. While he just named a new CEO, he’s likely to remain hands-on with the social media company as executive chair and CTO.
Straubel was an early Tesla employee and its battery pack and charging expert. He was also seen internally as a calm voice of reason next to the fiery Musk.
Proxy advisory firm Glass Lewis has urged investors to vote against Straubel’s nomination, saying he hasn’t been gone long enough to be truly independent. He maintained an advisory role after leaving the company and would replace director Hiromichi Mizuno, a former chief investment officer for the Japan Government Pension Investment Fund who isn’t standing for reelection after a three-year board stint. Institutional Shareholder Services opposes the reelection of Denholm.
Karen Róbertsdóttir, a shareholder based in Reykjavik, Iceland, wants Tesla’s board to prepare and maintain a publicly disclosed key-person risk report, given that the company itself says in regulatory filings that it’s highly dependent on Musk but has never named a clear No. 2. Tesla has just four named executive officers: Musk, CFO Zachary Kirkhorn, and senior vice presidents Drew Baglino and Tom Zhu.
“For a growth company prominently identified with a single key person, it is absolutely essential — and not at all an unreasonable imposition — for investors to have data on the steps the company is taking to prepare for the potential departure of key persons,” said Róbertsdóttir, who’s traveled to Texas to attend the meeting.
Tesla’s board is opposed, saying the measure would invite competitors to “target and recruit high-value executives away from Tesla, including those who may be identified as potential successors as part of succession planning.”
The company has reached out to shareholders — in particular its formidable base of retail investors — to make sure they’re aware of the meeting. A short video by Denholm is on the investor relations page of Tesla’s website, and Tesla will livestream the meeting on Twitter.
While Musk announced last week that Linda Yaccarino, the former head of advertising for NBCUniversal, will be Twitter’s new CEO, he’ll remain in charge of product, software and systems operations.
Other shareholders plan to press Tesla at the meeting to ensure the company gets no parts or materials made using child labor. Courtney Wicks, executive director of Investor Advocates for Social Justice, which represents several faith-based investors, will bring a floor proposal to require that Tesla’s board to issue a report describing if and how the company plans to eradicate child labor from its supply chain.
IASJ and the Sisters of the Good Shepard have filed three previous proposals at Tesla focused on the sourcing of cobalt from the Democratic Republic of the Congo, but missed the proxy-filing deadline this year.
In its most recent impact report, Tesla said it digitally traced shipments of cobalt using blockchain-enabled barcode scanning technology at every stage of the supply chain, from the mine to its factory in Shanghai.
