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Jun 18, 2024

Anti-harassment report proposal attracts support among Tesla shareholders

State of New York Comptroller requested information on company’s efforts

Almost a third of votes cast at Tesla’s AGM last week backed a shareholder proposal seeking information on the electric vehicle company’s work against harassment and discrimination.

The resolution was filed by Thomas DiNapoli, comptroller of the State of New York and trustee of the New York State Common Retirement Fund. It asks that Tesla’s board oversee the preparation of an annual public report ‘describing and quantifying the effectiveness and outcomes of [the company’s] efforts to prevent harassment and discrimination against its protected classes of employees.’

The proposal suggests the board may wish to consider including disclosures such as:

  • ‘The total number and aggregate dollar amount of disputes settled by the company related to abuse, harassment or discrimination in the previous three years
  • ‘The total number of pending harassment or discrimination complaints the company is seeking to resolve through internal processes, arbitration or litigation
  • ‘The retention rates of employees who raise harassment or discrimination concerns, relative to total workforce retention
  • ‘The aggregate dollar amount associated with the enforcement of arbitration clauses
  • ‘The number of enforceable contracts for current or past employees [that] include concealment clauses, such as non-disclosure agreements or arbitration requirements, that restrict discussions of harassment or discrimination
  • ‘The aggregate dollar amount associated with agreements containing concealment clauses.’

The proposal was supported by 31.5 percent of votes cast, a figure that while not a majority is widely regarded as significant among governance professionals.

The comptroller’s office writes in a supporting statement that, despite a Tesla statement that the company has a ‘zero-tolerance policy for harassment of any kind’… [T]here have been numerous serious allegations of racial or sexual harassment and discrimination at Tesla.’

The proponent states: ‘Civil rights violations within the workplace can result in substantial costs to companies, including fines and penalties, legal costs, costs related to absenteeism, reduced productivity, challenges recruiting and distraction of leadership. A company’s failure to properly manage its workforce can have significant ramifications, jeopardizing relationships with customers and other partners. A public report such as the one requested would assist shareholders in assessing whether the company is improving its workforce management.’

‘Already addressing the issues’
Tesla’s board had recommended that shareholders vote ‘no’, writing in the firm’s proxy statement that it has ‘considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders, as the company is already addressing the issues targeted by the proposal and the reporting requested by the stockholder proponent would lead to confusion rather than drive stockholder value.

‘Tesla’s goal is to create an environment where people enjoy coming to work every day. We believe that it is essential to provide all employees worldwide with a respectful and safe working environment where all employees can achieve their potential.

‘As a result we do not tolerate discrimination, harassment, retaliation or any mistreatment of employees in the workplace or work-related situations. Our policies and practices are codified in our code of business ethics as well as our employee guidebook. In addition, our compensation committee reviews and oversees human capital management practices relating to our employees.’

For example, the board writes, anti-harassment training is conducted on the first-day orientation for newly hired employees and is recurring for leaders and other employees. The company also runs leadership-development programs intended to improve leaders’ skills and help them understand how to appropriately respond to and address employee concerns, the board said.

Among other things, the board writes that Tesla has a team that carries out impartial investigations into employee concerns and supports ‘overall positive workforce engagement. We encourage employees to raise concerns internally or externally. We believe that our active board oversight, existing policies and dedicated team effectively address the issues targeted by this proposal.’

A request for comment from the company was not returned immediately.

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