TESLA MOTORS, INC. | Annual reporting on board diversity at TESLA MOTORS, INC.

Status
9.73% votes in favour
AGM date
Proposal number
8
Resolution details
Company ticker
TSLA
Lead filer
Undisclosed filer
Resolution ask
Report on or disclose
ESG theme
  • Social
  • Governance
ESG sub-theme
  • Diversity, equity & inclusion (DEI)
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Discretionary
Company HQ country
United States
Resolved clause
Shareholders request that Tesla report annually on its policies and practices to help ensure its elected Board of Directors attains racial and gender representation that is better aligned with the demographics of its customers and/or regions in which it operates.

The report should be prepared at reasonable cost, omitting proprietary information, litigation strategy and legal compliance information.
Whereas clause
Our nation's racial reckoning and coronavirus's illumination of vast social inequities has led companies to reevaluate their diversity, equity, and inclusion policies and goals. Board diversity is one important facet, as investors and companies recognize it can be accretive to long term value creation. Board diversity requirements, including Nasdaq's 2021 ruling and California's 2018 legislation, acknowledge the value of racially and gender diverse boards.

Research indicates board diversity is an important lever to increase shareholder value, resulting in higher revenues, higher Return on Assets, a more diverse workforce, enhanced corporate governance, and improved stakeholder relations.

• Boston Consulting Group finds companies with greater board diversity had 19 percent higher revenues than competitors.

• International Monetary Fund finds substituting one man for one woman on a board is associated with higher Return on Assets.

• Credit Suisse finds as the percentage of women on the board increases, so does the percentage of women in leadership.

• The University of Toronto finds companies with greater board diversity are less prone to accounting mistakes, business controversies, and poor investment decisions.

• Harvard Law research finds companies may be better positioned to recognize and respond to the interests of diverse stakeholders.

In response to this research, 61 percent of investors believe boards “should aim to reflect the company's customer base and the broader societies in which they operate by including directors drawn from racial and ethnic minority groups” (Institutional Shareholder Services).

Tesla does not report its current gender or racial and ethnic board composition, but Tesla's board demographics appear largely disproportionate from its customer base. Bloomberg reports the Board of Directors is comprised of 22 percent women. The demographic makeup of the United States, used here as a proxy for Tesla's customer base, is comprised of 51 percent women and 42 percent minorities.

We believe that a Board of Directors with racial and gender composition reflective of Tesla's customer base and/or regions in which it operates will more astutely minimize business risk, maximize opportunity, and increase shareholder value.
Supporting statement
A report adequate for investors could, with board discretion, include disclosure of:

• Board targets aligned with customer demographics (for example, using company's country/state headquarter demographics as a proxy)

• Progress/challenges meeting racial and/or gender board diversity targets

• Strategies or practices deployed to increase diversity of board candidates

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