© Reuters. FILE PHOTO: The TESLA logo appears outside a dealership in the Brooklyn area of New York City, US, April 26, 2021. REUTERS/Shannon Stapleton/File Photo
Written by Ross Kerber and Hyunjoo Jin
(Reuters) – Electric car maker Tesla (NASDAQ:) on Wednesday announced less-than-usual support for two directors at its latest shareholder meeting, and greater support for a call to review the company’s use of mandatory arbitration after a court ruling in favor of a board member. A temporary employee accused Tesla of racial discrimination.
The votes indicated growing shareholder dissatisfaction with the company.
In the securities filing, Tesla said support for a shareholder decision on how it handles arbitration matters rose to 46% of the vote cast at its annual meeting last week, from 27% for a similar proposal in 2020. Both directors running for election this year also received less support From any other support last year.
The non-binding resolution on arbitration asked Tesla’s board of directors to study the impact of its use of mandatory arbitration to resolve workplace complaints of harassment and discrimination. The case attracted more focus after a jury awarded $137 million to a Tesla contract worker last week for racism in the workplace.
Tesla opposed the decision, arguing that arbitration could benefit the parties to the dispute. The company did not immediately comment on the shareholder vote.
Other tech companies have scaled back or eliminated mandatory arbitration, including Uber Technologies (NYSE:) Inc and Google’s parent company Alphabet (NASDAQ:): Inc. In April, nearly half Goldman Sachs Group Inc (NYSE:) shareholders voted in favor of examining the bank’s use of mandatory arbitration.
Kristen Hull, CEO of Nia Impact Capital that introduced the decision, described the top support this year as “a huge improvement as we educate people about why it’s important to build an innovative team with a diverse and inclusive company culture.”
Hull said Tesla CEO Elon Musk owns a 23% stake in Tesla, according to the agent’s statement, meaning the action would have ended his votes.
Another measure related to racial issues received a majority of support, with 57% of the vote cast. The procedure provided by Calvert Research and Management asked Tesla to provide a detailed report on its diversity and inclusion efforts. Tesla opposed the measure, citing current and future reporting plans.
Wednesday’s filing showed between two company directors running for re-election last week that James Murdoch received support from 70% of the votes cast, and Kimbal Musk, Elon Musk’s brother, received support from 80% of the votes cast.
Managers in large US companies typically receive a subsidy of 90% or more. At Tesla, corporate governance consultant Francis Bird of Alchemy Strategies Partners said, “Concerned candidates should do some serious thinking about the quality of their oversight and how they/the company can best communicate this to the market.”
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