Tesla investors will vote on whether to oust James Murdoch and Kimbal Musk from the board.
Shareholders of Tesla will vote on Thursday on proposals aimed at forcing the electric-car maker to be more transparent and accountable in its employee dealings, just days after a jury ordered the company to pay $137 million to a former worker who said he was subjected to racism.
The votes will take place virtually at the company’s annual shareholder meeting, where some investors are also hoping to oust two directors picked by management — James Murdoch, the former 21st Century Fox executive, and Kimbal Musk, the brother of Tesla’s chief executive, Elon Musk.
If any of these efforts are successful, it would represent a big rebuke to Tesla, the dominant maker of electric cars and a Wall Street phenomenon, and to Mr. Musk’s control over the company. Tesla is the world’s most valuable automaker by far and its shares have a devoted following among professional and individual investors.
The company is on track to sell about a million cars this year and is planning a major expansion, including by building a factory near Austin, Texas, where the meeting is being hosted, and one near Berlin. Mr. Musk said last year that he had moved to Texas, where his other company SpaceX has a site for launching rockets.
Activist shareholders have submitted five proposals to compel Tesla to disclose more information about its efforts to diversify its work force, how it handles employee disputes and its human rights record. The proposals also include calls for greater oversight over how Tesla manages employees and for requiring directors to seek re-election every year, instead of every three years.
Tesla’s board opposes all those measures and has encouraged investors to re-elect Mr. Murdoch and Kimbal Musk.
A federal jury on Monday dealt Tesla a blow by siding with Owen Diaz, a former contractor who said he faced repeated racist harassment while working at Tesla’s factory in Fremont, Calif., in 2015 and 2016. The jury ordered Tesla to pay Mr. Diaz $137 million. Tesla faces similar accusations from dozens of others in a class-action lawsuit.
Under a proposal from Calvert Research and Management, a firm that focuses on responsible investment and is owned by Morgan Stanley, Tesla would have to publish annual reports about its diversity and inclusion efforts.
Another proposal, by Nia Impact Capital, which owns fewer than 1,000 Tesla shares, would require the carmaker to publish a report on its practice of using mandatory arbitration to resolve employee disputes. That practice, Nia argued in its proposal, presents “a long-tail risk” to Tesla and can make it harder for companies to identify and address widespread discrimination.
Separately, ISS, a firm that advises investors on shareholder votes and corporate governance issues, has opposed the election of Mr. Murdoch and Kimbal Musk because it says the board hasn’t justified the compensation it pays to some of its members, including nearly $6 million last year to Robyn Denholm, who chairs the board, and more than $9 million to Hiromichi Mizuno, mainly in stock option grants.
While Mr. Murdoch received only $32,500 for serving on the board last year and Mr. Musk received $20,000, the amounts paid to the other members are much higher than is typical at similar large corporations, according to ISS. Because Mr. Murdoch and Mr. Musk are the only members up for election, they should be denied a chance to continue serving on the board, ISS said.
“Accordingly, support is not warranted for directors responsible for approving director pay,” the firm said in a note to clients last month.
Mr. Musk and Mr. Murdoch hold shares and options in the company that are worth hundreds of millions of dollars at the current share price, according to Tesla’s most recent proxy filing with the Securities and Exchange Commission.
Tesla’s board said the pair should remain. Mr. Murdoch provides the company with deep executive experience, knowledge of international markets and experience with adopting new technologies, it said in a securities filing. Mr. Musk brings experience in retail and consumer markets and technology companies. Mr. Murdoch has been on Tesla’s board since 2017 and Kimbal Musk has been a board member since 2004.
Peter Eavis contributed reporting.