Electric-car maker Tesla (TSLA 2.97%) has been grappling with numerous problems in recent months, mostly around continued challenges in ramping Model 3 production and concerns about working conditions and labor rights. In recent weeks, activist investors have called on the company to split the CEO and chairman roles that Elon Musk currently occupies. Some investors also wanted to remove three directors that were up for re-election this year from the board: Antonio Gracias, Kimbal Musk, and James Murdoch.
At Tesla's annual meeting yesterday, all three directors were re-elected. The auditing firm proposal was basic housekeeping, but the two shareholder proposals failed as well, which was in line with the board's recommendations. The company has now filed a Form 8-K for the official results, and here are the tallies for each shareholder proposal.
Elon Musk. Image source: Tesla.
Proposal for proxy access
One shareholder proposal related to proxy access, which is where long-term shareholders are able to directly nominate directors to the board. Advocates for proxy access argue that it is positive for corporate governance, as shareholders have greater say in who represents their interests on the board of directors, but critics believe it opens up the possibility of special interest groups securing board seats. Logistically, proxy access is cumbersome and costly to implement.
This proposal did not garner enough support enough to pass.
|
Proposal for Proxy Access |
Votes |
|---|---|
|
For |
25.8 million |
|
Against |
76.7 million |
|
Abstained |
703,000 |
|
Broker non-votes |
37.25 million |
Data source: Form 8-K. Figures rounded.
When excluding abstentions and broker non-votes, roughly 25% of shareholders voted in favor of proxy access, with 75% voting against.
Proposal to require the chairman to be an independent director
This was the most important proposal, as some investors -- namely CtW Investment Group -- have been calling on Musk to step down from one of his dual roles. This isn't the first time CtW has called on Musk to step down as either chairman or CEO, and it probably won't be the last.
Unlike some other founder-led companies, Musk does not have majority voting power and Tesla does not have a supervoting share class. All Tesla shareholders receive one vote per share, with Musk owning approximately 22% of shares outstanding. That said, here's the tally for this proposal:
|
Proposal to Require an Independent Chairman |
Votes |
|---|---|
|
For |
16.67 million |
|
Against |
86 million |
|
Abstained |
522,000 |
|
Broker non-votes |
37.25 million |
Data source: Form 8-K. Figures rounded.
When excluding abstentions and broker non-votes, roughly 16% of shareholders voted for splitting the CEO and chairman roles, while an overwhelming 84% were in favor of the status quo. By and large, investors still believe in Musk to perform both roles.
It's worth noting that Tesla is at least open to the idea of Musk only serving one of these roles in the future. The company unveiled an insane compensation package for Musk earlier this year, which was approved at a special stockholder meeting in March, and the employment vesting condition for the package is that Musk remains either CEO or serve as both executive chairman and chief product officer. That gives Tesla and Musk some flexibility in the future, but for now Musk will remain both CEO and chairman.
