Pension funds have called on Tesla to commit to maintaining a ‘one share, one vote’ approach after statements and measures that suggest the company will depart from this principle.

In a statement ahead of Tesla’s annual general meeting (AGM) on Thursday, investors in the Investor Coalition for Equal Votes (ICEV) said a professed commitment to shareholder democracy by the Tesla chair seems at odds with recent statements from the Tesla chief executive officer about “reasonable dual-class [shares]… post-IPO”.

The investors also said that a proposed document for any re-incorporation of the firm included powers for the board to issue new preferred shares and to give those preferred shares differential voting rights.

“Although such a clause is not unusual, Tesla gives us particular cause for concern in light not only of these recent public comments but also the findings from the January Delaware Court of Chancery that the majority of the current board is ‘beholden to Musk’,” the ICEV statement read.

In January the chancellor of the Delaware Court of Chancery struck down a $55.8bn compensation plan that Tesla’s board of directors had granted to CEO Elon Musk, finding that the directors breached their fiduciary duties.

As part of the review of the case the court analysed Musk’s relationships with the eight active members of the board, ultimately determining that the majority of the board was beholden to Musk, including the four members of the compensation committee.

In their statement, the ICEV members also noted that, in the 14 years since Tesla’s IPO, the company had achieved significant growth with equal voting rights.

“Restructuring the capital structure to distort the link between equity and control isn’t necessary to Tesla’s continued long-term success,” they said.

“We hope the Tesla Board and CEO continue to recognise shareholders’ shared aspirations for the business, and follow through on their commitment to shareholder democracy by maintaining equal voting rights.”

ICEV was launched in 2022 by Railpen in the UK, in tandem with the Council of Institutional Investors (CII) and several US pension funds. It has more than 15 members, with those signing the Tesla statement including Railpen, NEST, Ethos Engagement Pool International, Ethos Foundation, and People’s Partnership.

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