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GOVERNANCE

Tesla shareholders defeat proposal seeking annual elections for directors

Tesla
Tesla power pack/inverter units at a Southern California Edison energy storage facility.

A shareholder proposal calling for annual director elections was defeated at Tesla Inc.'s annual meeting, despite support from a number of large pension funds.

Vote totals were not immediately available.

The proposal, filed by the Connecticut Retirement Plans & Trust Funds, Hartford, called for the company to move to annual director elections, rather than the current structure of staggered three-year terms.

The staggered-term structure “is not in the best interest of shareholders because it reduces accountability and is an unnecessary anti-takeover device,” the Connecticut pension fund said in the proposal. The Connecticut plans also criticized Tesla for having several board members with professional or personal ties to Elon Musk, the CEO and board chairman.

According to their proxy-voting disclosures, the $322.3 billion California Public Employees' Retirement System, Sacramento; $206.5 billion California State Teachers' Retirement System, West Sacramento; $189.4 billion Florida State Board of Administration, Tallahassee; C$316.7 billion ($235.4 billion) Canada Pension Plan Investment Board, Toronto; and $133.2 billion Texas Teacher Retirement System, Austin, all supported the proposal.

In its proxy statement, Tesla urged shareholders to against the proposal, stating: “The company's mission, which is to accelerate the world's transition to sustainable energy, requires particularly long-term strategic planning by our board. By providing directors with staggered three-year terms, our current board structure allows our directors to maximize the interests of the company and our stockholders over the long term, without being distracted by special interests that seek only short-term returns.

Bloomberg contributed to this story.