Tesla changed the deadline for investor proposals, angering activists

Tesla investors will have fewer opportunities to voice their discontent with management at the company’s annual meeting, which takes place on Tuesday in Austin, Texas, because of what some shareholders said was a deliberate attempt by the automaker to suppress dissent.

In October, Tesla moved the meeting from August to May and gave shareholders two fewer months to submit proposals. Tesla announced the new deadline for bids on December 22 at the end of a 60-page regulatory filing, and most activist investors ignored the change.

Tesla and its CEO Elon Musk have often been criticized by activist investors on a variety of issues, including allegations of racial discrimination at its California plant, the company’s hostility to labor unions and whether its board of directors is doing a good job of overseeing management. Musk and Tesla board members dismiss complaints of discrimination and point to the company’s strong earnings and sales growth as evidence that it’s doing very well.

At several recent annual meetings, activists have made proposals to get the company to consider changes — most of which fail to garner enough support. This year, only one shareholder proposal is on the agenda. The proposal, made by an investor from Iceland, asks Tesla to come up with a plan to replace Mr. Musk if he quits or is no longer able to do his job.

Tesla did nothing wrong by pushing back the deadline, according to the SEC’s decision. But some activist shareholders saw this as a deliberate attempt to dampen their efforts to get the company to treat employees better and add board members more willing to stand up to Mr. Musk.

“It was really disingenuous,” said Christine Hall, CEO of Nia Impact Capital, a company in Oakland, California, that previously challenged Tesla’s policy requiring employees to resolve discrimination complaints in an arbitrator rather than in court.

Tejal Patel, executive director of SOC Investment Group, which represents the interests of union pension funds, said the deadline change was “indicative of how Tesla will treat its shareholders.”

Tesla did not respond to a request for comment.

Some investors saw signs that Mr. Musk was heeding some shareholder criticism when he announced last week that he would appoint Linda Iaccarino as CEO of Twitter, the social media company that Mr. Musk acquired last year. Ms. Yaccarino’s appointment could free up Mr. Musk to spend more time running Tesla. Investors have complained that Twitter has distracted Musk from Tesla at a time when the automaker is facing slowing demand and increased competition, driving down prices.

Nia Impact and the SOC were among eight investment funds and activist groups that last month called on Tesla shareholders to reject JB Straubel’s nomination to the company’s board of directors. They said that Mr. Straubel, who was a senior Tesla executive for years before leaving to start the battery and materials recycling company in 2019, “is clearly a company insider and not an appropriate choice for a board that already has a dearth of independence.”

Glass Lewis, a company that advises institutional shareholders, also urged Tesla stockholders not to vote for Mr. Straubel, saying his election would “only exacerbate the longstanding lack of board independence at Tesla.”

In the past, some proposals from activist investors have garnered significant support, and last year, one passed despite opposition from Tesla’s board of directors. This action allowed shareholders to appoint board members, although none have done so this year.

Mr. Musk owns 13 percent of Tesla, which means shareholder proposals must gather significant support among other shareholders to pass.

But the activists’ proposals, most of which are non-binding and simply call for the company’s board and management to consider making changes, would have had a better chance this year after Musk sold some of his Tesla stake to fund his purchase of Twitter.

Tesla also faces criticism from Washington. A group of eight senators led by Richard Blumenthal, a Connecticut Democrat, called on Tesla this month to stop requiring employees and car buyers to resolve complaints before arbitrators.

The practice, the letter states, “prevents workers and consumers from taking discrimination claims and consumer safety complaints to court — effectively shielding the company from accountability and public scrutiny.”

Some of the activist shareholders said they plan to try to introduce measures during the meeting, which starts at 3 p.m. Central time.

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