Tesla directors get more flexible support, shareholder proposal gains traction

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The TESLA logo is seen outside a dealership in the Brooklyn neighborhood of New York, United States, on April 26, 2021. REUTERS / Shannon Stapleton / File Photo

October 13 (Reuters) – Electric car maker Tesla Inc (TSLA.O) on Wednesday reported weaker-than-usual support for two directors at its recent shareholders’ meeting, and greater support on an appeal to review the company’s use of compulsory arbitration after a court ruling in favor of a temporary employee who accused Tesla of racial discrimination.

The votes indicated growing dissatisfaction among the company’s shareholders.

In a securities filing, Tesla said support for a shareholder resolution on how it handles arbitration matters rose to 46 percent of the votes cast at its annual meeting last week, from 27 percent for one. similar proposal in 2020. The two directors nominated for election this year also received less support than last year.

The non-binding arbitration resolution had asked Tesla’s board of directors to study the impact of its use of compulsory arbitration to resolve complaints of harassment and discrimination in the workplace. The issue gained further attention after a $ 137 million jury was awarded to a Tesla contract employee last week for racism in the workplace. Read more

Tesla had opposed the resolution, arguing that arbitration can benefit both sides of a dispute. The company did not immediately comment on the shareholder vote.

Other tech companies have reduced or eliminated compulsory arbitration, including Uber Technologies Inc and Google’s parent company Alphabet Inc. In April, nearly half of the shareholders of Goldman Sachs Group Inc voted in favor of the review. the bank’s use of compulsory arbitration. Read more

Kristin Hull, CEO of Nia Impact Capital who tabled the resolution, called the higher support this year “a huge improvement as we explain to people why this is important to build an innovative team with a diverse corporate culture and inclusive”.

Tesla CEO Elon Musk owns 23% of Tesla’s shares, according to his proxy statement, meaning the measure would have been ruled out of his votes, Hull said.

Another racial-related measure won a majority of support, with 57% of the vote cast. Filed by Calvert Research and Management, the measure asked Tesla to report in detail on its diversity and inclusion efforts. Tesla had opposed the measure, citing current and future reporting plans.

Wednesday’s filing showed that of the two company directors running for re-election last week, James Murdoch received the support of 70% of the vote cast and Kimbal Musk, Elon Musk’s brother, received the support of 80% of the votes cast.

Directors of large US companies typically receive 90% or more support. At Tesla, “the director candidates in question should seriously think about the quality of their oversight and how they / the company can best communicate it to the market,” said Francis Byrd, governance consultant at Alchemy Strategies Partners company.

Reporting by Ross Kerber and Hyunjoo Jin; Editing by Stephen Coates and David Gregorio

Our Standards: Thomson Reuters Trust Principles.


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