TESLA MOTORS, INC. | Adopt targets and reporting on the feasibility of intergrating sustainability metrics into executive compensation plans at TESLA MOTORS, INC.

Status
10.17% votes in favour
AGM date
Previous AGM date
Proposal number
11
Resolution details
Company ticker
TSLA
Lead filer
Tulipshare
Resolution ask
Set targets or plans
ESG theme
  • Environment
ESG sub-theme
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Discretionary
Company HQ country
United States
Resolved clause
RESOLVED: Shareholders request that, within one year, the Board Compensation Committee adopt targets and publicly report quantitative metrics appropriate to assessing the feasibility of integrating sustainability metrics, including metrics regarding diversity among senior executives, into performance measures or vesting conditions that may apply to senior executives under the Company’s compensation plans or arrangements.
Whereas clause
"WHEREAS: The integration of sustainability metrics into executive compensation can enhance transparency, promote responsible corporate citizenship, and ensure that Tesla remains at the forefront of sustainable business practices. Numerous leading companies have recognized the importance of integrating sustainability metrics into executive compensation. The Global Reporting Initiative and the Sustainability Accounting Standards Board report on the growing trend of companies incorporating sustainability criteria into performance evaluations and compensation structures. By following industry best practices, Tesla can demonstrate its commitment to sustainability leadership.
Workers and investors alike are increasingly rejecting excessive executive compensation as “roughly two dozen major U.S. companies have rejected generous executive-pay packages in shareholder votes in the past year, balking at the massive pay gaps between chief executives and workers.” (1) Companies are “embracing different approaches to factoring ESG into executive pay.”(2) This trend of increasing corporate focus on sustainability metrics stands in stark contrast to Tesla CEO Musk’s claim that ESG is a “scam.”(3)
Legal and reputational risks have already materialized for Tesla in the form of shareholder lawsuits. In 2023, Tesla’s directors were ordered to “return $735 million to the company to settle claims they grossly overpaid themselves in one of the largest shareholder settlements of its kind.”(4) Musk’s $56 billion executive compensation plan has “helped lift the ceiling on CEO pay” and widened the gap between workers and top executives’ pay packages, according to The New York Times.(5) Moreover, the Economic Policy Institute equated Musk’s realized compensation to roughly 1,000 times the average pay of other large-company CEOs.(6) Musk’s $56 billion executive pay package was challenged separately by a Tesla shareholder under a claim of unjust enrichment.(7) Given that inflows into sustainable funds rose from $5 billion in 2018 to nearly $70 billion in 2021,(8) Musk’s criticism of ESG does not negate the fact that Tesla needs to increase transparency and accountability on sustainability performance to ensure future shareholder value."
Supporting statement
"SUPPORTNG STATEMENT: In the Board’s discretion we recommend Tesla’s report include:
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Specific performance metrics aligned with the United Nations Guiding Principles on Business and Human Rights. These metrics should assess Tesla’s success in preventing and mitigating human rights risks across its value chain.
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Robust and comprehensive human rights due diligence process, applying the principles of the UN Guiding Principles. This process should be integrated into Tesla’s decision-making, risk assessment, and operational practices to identify, prevent, and address potential human rights impacts.
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A performance-based component in the executive compensation structure directly tied to the achievement of the established human rights and performance metrics. This linkage will incentivize the Board to lead Tesla in embedding human rights considerations into the core of its operations."

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
Rothschild & co Asset ManagementFor
Anima SgrForIncorporating sustainability performance measures as a broader component of executive compensation would serve to further incentivize executives to ensure that company performance on sustainability considerations, alongside financial factors, is appropriately aligned with management's interests, the firm's stated commitments to social responsibility, and long-term corporate strategy.

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