TESLA MOTORS, INC. | Amend Article X of the Bylaws at Tesla Motors

Status
15.60% votes in favour
AGM date
Proposal number
11
Resolution details
Company ticker
TSLA
Lead filer
Illinois State Treasurer's Office
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • Shareholder rights
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Discretionary
Company HQ country
United States
Resolved clause
pursuant to Article X of the Amended and Restated Bylaws of Tesla, Inc., shareholders of Tesla, Inc. (“Tesla”) hereby amend the Bylaws to add the following to the end of Article X:
“; and provided further, however, that any amendment of these bylaws by the board of directors to make the “affirmative election” referenced in section 21.373(b) of the TBOC to be governed by section 21.373 of the TBOC shall be invalid if it is not ratified within one year of such amendment by the affirmative vote of the holders of at least 66 2/3% of the total voting power of outstanding voting securities, voting together as a single class.”
Supporting statement
Section 21.373 of the Texas Business Organizations Code (“TBOC”) allows corporations like Tesla whose principal office is in Texas to amend their governing documents to elect to be governed by the section, which imposes more stringent requirements for submitting shareholder proposals than those in the Securities and Exchange Commission’s Rule 14a-8:
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Whereas a shareholder holding between $2,000 and $25,000 of company stock, depending on ownership duration, is eligible to submit a proposal under Rule 14a-8, section 21.373(e) requires a shareholder or group to own $1,000,000 in company stock or 3% of voting shares.
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Section 21.373 mandates that a proponent solicit holders of shares representing at least 67 percent of the voting power of shares entitled to vote on the proposal, which is costly at a large, widely-held company like Tesla.
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We believe that curtailing eligibility to submit a proposal would not serve the best financial interests of the company and Tesla’s shareholders. Shareholder proposals are a crucial mechanism for feedback and investor voice, and have spurred value-enhancing reforms at many companies. For example, studies have found a negative relationship between governance arrangements reducing shareholder influence, such as classified boards and poison pills, and company performance.(1) Shareholder proposals submitted between 2011 and 2014 led 121 large-capitalization companies to declassify their boards.(2) Many proposals that achieve majority shareholder support are submitted by smaller shareholders.(3)
Preserving shareholders’ ability to communicate with Tesla and one another is important, given Tesla’s performance and governance challenges. First quarter 2025 net income dropped by 70% compared to the first quarter of 2024,(4) Tesla’s share price fell by over 21% during the first half of 2025;(5) and concerns have been raised about Elon Musk’s outside commitments and the board’s oversight.(6)
Accordingly, shareholders should have the opportunity to ratify a board bylaw amendment that would limit their rights by electing to be covered by TBOC section 21.373. A ratification threshold of two-thirds of outstanding shares mirrors the standard now imposed for shareholder amendment or repeal of certain bylaws deemed important, including Article X itself.

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