Tesla investors will have less opportunity to voice their dissatisfaction with management at the company’s annual meeting, which takes place Tuesday in Austin, Texas, because of what some shareholders say was a deliberate effort by the automaker to suppress dissent.
In October, Tesla moved the meeting from August to May and gave shareholders two months less time to submit proposals. Tesla announced the new Dec. 22 deadline for submitting proposals at the end of a 60-page regulatory filing, and most activist investors overlooked the change.
Tesla and its CEO, Elon Musk, have often been criticized by activist investors over a variety of issues, including allegations of racial discrimination at the California plant, the company’s hostility to unions, and whether the board is properly overseeing management. Mr. Musk and Tesla’s board members have dismissed complaints of discrimination, pointing to the company’s strong earnings and sales growth as evidence that it is performing extremely well.
At several recent annual meetings, the activists have made proposals to push the company to make changes, most of which have not received enough support. Only one shareholder proposal was put on the agenda this year. In that proposal, submitted by an investor from Iceland, Tesla is asked to come up with a plan to replace Mr. Musk if he quits or is no longer able to do his job.
According to a decision by the Securities and Exchange Commission, Tesla did nothing wrong by extending the deadline. But some activist shareholders saw it as a deliberate attempt to stifle their efforts to get the company to improve its treatment of employees and add board members more willing to take on Mr. Musk.
“It was really sneaky,” says Kristin Hull, the CEO of Nia Impact Capital, an Oakland, California, firm that previously challenged a Tesla policy requiring employees to resolve discrimination complaints before an arbitrator rather than before. the court.
Tejal Patel, the executive director of SOC Investment Group, which represents the interests of union pension funds, said the deadline change was “indicative of how Tesla treats its shareholders.”
Tesla did not respond to a request for comment.
Some investors saw signs that Mr. Musk was responding to some of the shareholder criticism when he announced last week that he would appoint Linda Yaccarino as CEO of Twitter, the social media company that Mr. Musk acquired last year. Hiring Ms. Yaccarino will allow Mr. Musk to spend more time managing Tesla. Investors have complained that Twitter has diverted Mr. Musk from Tesla at a time when the automaker is facing declining demand and increased competition, leading to price cuts.
Nia Impact and SOC were among eight investment funds and activist groups that last month called on Tesla shareholders to reject the nomination of JB Straubel to the company’s board of directors. They said Mr. Straubel, who was a senior executive at Tesla for many years before leaving to start a battery recycling and materials company in 2019, “is clearly a company insider and not an appropriate choice for a board of directors that already has a lacks independence. ”
Glass Lewis, a firm that advises institutional shareholders, also urged owners of Tesla stock not to vote for Mr. Straubel, saying his election would “only exacerbate a long-standing lack of board independence at Tesla.” .
In the past, some proposals from activist investors have received significant support, and one passed last year despite opposition from the Tesla board. That measure allowed shareholders to nominate directors, but no one did this year.
Mr. Musk owns 13 percent of Tesla, meaning shareholder proposals must receive significant support from other shareholders to succeed.
But proposals from activists, most of which are non-binding and simply appeal to the company’s board and management to make changes, may have had more chance this year after Musk sold part of his stake in Tesla. sold to finance his purchase of Twitter.
Tesla is also receiving criticism from Washington. A group of eight senators led by Richard Blumenthal, a Connecticut Democrat, this month called on Tesla to stop requiring employees and car buyers to resolve complaints before arbitrators.
The practice, the letter said, “prevents employees and consumers from bringing discrimination claims and consumer safety complaints to court — effectively shielding the company from both liability and public scrutiny.”
Some activist shareholders said they plan to take action at the meeting, which begins at 3 p.m. Central Time.