.png)
ICEV statement signatories ask Tesla to commit to proportionate voting rights, in light of recent comments from their CEO regarding dual-class share structures and the findings from the January Delaware Court of Chancery around the current Tesla board.
ICEV calls on Tesla to uphold equal voting rights
This Statement, published in advance of Tesla's June 2024 AGM and which is signed by global pension funds and asset managers, calls on Tesla to commit to maintaining a one-share, one-vote approach. This is in light of recent statements from the Tesla CEO on dual-class shares, comments from the Delaware Court of Chancery in January 2024 about the independence of Tesla's board and the proposed Certificate of Formation for any re-incorporation of the firm.
The Statement is as follows:
"It is a fundamental tenet of the capitalist model that shareholders should have a voice in proportion to their economic ownership of a company: "one share, one vote". The ability to scrutinize, challenge, and hold companies to account is a crucial part of shareholder governance which ultimately drives better long-term outcomes for companies."
"Tesla's Chair in the 2024 Proxy Statement stated that "corporate democracy and stockholder rights are at the heart of Tesla's values." However, this commitment to shareholder democracy seems at odds with recent statements from the Tesla CEO about "reasonable dual-class [shares]… post-IPO." We also note that the proposed Certificate of Formation includes powers for the board to issue new preferred shares and to give those preferred shares differential voting rights.
"Although such a clause is not unusual, Tesla gives us particular cause for concern in light not only of these recent public comments but also the findings from the January Delaware Court of Chancery that the majority of the current board is "beholden to Musk."
"Given Tesla's recognition that "[stockholder] votes and … voices make critical decisions for the future [of Tesla]" we urge the Tesla board and CEO to live up to this ideal and commit to maintaining a one-share, one-vote approach. With the board's continued commitment to proportionate voting rights, Tesla's shareholders will continue to have a meaningful tool to communicate their views.
"June 29th marks the 14th anniversary of the Tesla IPO. In that time, the company has achieved extraordinary growth with equal voting rights. Restructuring the capital structure to distort the link between equity and control isn't necessary to Tesla's continued long-term success. We hope the Tesla Board and CEO continue to recognize shareholders' shared aspirations for the business, and follow through on their commitment to shareholder democracy by maintaining equal voting rights."
