Woke Tesla shareholders plot to oust board members James Murdoch and Elon Musk’s brother Kimbal while calling for company to publish annual ‘diversity report’ after $137M payout in workplace racism lawsuit
- Tesla will hold its annual shareholder meeting virtually on Thursday afternoon
- Several key votes will be held by those who own shares in the company
- Proxy advisory firm recommends removing James Murdoch and Kimbal Musk
- Firm argues that non-executive board members have excessive compensation
- Meanwhile another group is calling for Tesla to issue new annual diversity report
- Tesla’s board spoke out against the measure, saying it already has such reports
Activist Tesla shareholders are proposing the removal of board members James Murdoch and Kimbal Musk from the board, as well as demanding the company produce a new annual diversity report.
Tesla shareholders will vote on these proposals and others on Thursday at the company’s annual meeting, which will be held virtually from the company’s Gigafactory in Austin, Texas.
Other proposals on the shareholder ballot, known as a proxy statement, include cutting director terms to two years and eliminating a supermajority vote requirement to approve certain changes
Proxy advisory firm Institutional Shareholder Services (ISS) put forward the recommendation that Murdoch and Kimbal be removed, saying the board approved excessive compensation packages to non-executive board members.
Activist shareholders have a number of proposals up for a vote at Tesla’s annual shareholder meeting on Thursday. CEO Elon Musk (above) owns 17.2 percent of the company’s stock
Shareholders are proposing the removal of board members James Murdoch (left) and Kimbal Musk (right) from the board, citing excessive pay for non-executive board members
‘Votes AGAINST directors James Murdoch and Kimbal Musk are warranted due to concerns regarding excessive compensation to named executive officers and to non-executive directors,’ ISS wrote in a report sent to clients last month.
Murdoch was chief executive officer of 21st Century Fox and is the son of media magnate Rupert Murdoch, and Kimbal Musk is a restaurant entrepreneur and brother of Tesla CEO Elon Musk.
Both are running for re-election to the board. The board currently has nine members, but will have eight after the annual meeting because director Antonio Gracias is not running again.
ISS said shareholders should reject Murdoch because he serves on the audit and governance committees.
The governance committee failed to react appropriately to last year’s majority supported shareholder proposal and the audit committee signed off on pledging a significant amount of company stock to certain directors, raising questions about its risk oversight, ISS wrote.
Kimbal Musk does not serve on any board committees. He has been part of Tesla’s board since 2004, while Murdoch has been a member since 2017.
James Murdoch (right) was chief executive officer of 21st Century Fox and is the son of media magnate Rupert Murdoch (center)
Tesla’s board has argued that the two directors should remain on the board, saying that both bring valuable experience to the company.
It is unclear how many of Tesla’s billion shares ISS holds, but the group does not appear in a list of the firm’s top 10 shareholders.
Elon Musk, who owns 17.2 percent of the company’s stock, was reelected to the board a year ago with 98.8 percent of the vote.
Meanwhile, the proxy statement also includes votes on five shareholder proposals, all of which the board recommends voting against.
One of the proposals, put forward by Calvert Research and Management, calls on Tesla to annually publish a report fully assessing the company’s diversity and inclusion efforts.
‘Tesla has not fully released meaningful information allowing investors to determine the effectiveness of its human capital management programs related to workplace diversity,’ said Calvert in the proposal.
Calvert owns 87,680 shares of Tesla’s common stock, according to the proxy statement, a small fraction of the company’s roughly one billion outstanding shares.
In a response to the proposal, Tesla’s board wrote that ‘this proposal would not serve the best interests of Tesla or our stockholders.’
Tesla must pay nearly $137 million to Owen Diaz, a black former worker who said he suffered racial abuse at the electric carmaker’s San Francisco Bay Area factory
A US jury awarded the former Tesla employee $137 million over workplace racism at the electric car maker’s Fremont plant (above)
The company argued that it began publishing a Diversity, Equity and Inclusion Impact Report last year, and that it will continue to include this information in its annual Impact Report.
Tesla’s existing diversity report breaks down its existing workforce, as well as new hires and promotions, by race and gender. The shareholder proposal calls for expanding that reporting to individual job categories.
It follows a California verdict ordering Tesla to pay a black former employee $137 million in damages for turning a blind eye to racism the man encountered at the firm’s Silicon Valley auto plant.
Owen Diaz was hired through a staffing agency as an elevator operator at the electric vehicle-maker’s Fremont factory between June 2015 and July 2016, where he was subjected to racist abuse and a hostile work environment, according his lawsuit.
In his lawsuit filed in 2017, Diaz said African American employees at the factory, where his son also worked, were regularly subjected to racist epithets and derogatory imagery.
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