Tesla's 2024 Shareholder Meeting: Business Time

[00:00:10] Welcome to Texas. Home. The home of Tesla. My name is Brandon Earhart. I'm the general counsel and corporate secretary, and this meeting is going to be in two parts. First we're going to cover the 12 items that stockholders have been asked to vote on,

[00:00:42] as well as any other matters that have been properly presented. Second, our founder and CEO, Elon Musk, will provide a presentation. All right. This episode is obviously the business part of the 2024 shareholder meeting.

[00:01:01] And normally what I would do is I play that little clip for you and then we go right into the show's music, and then, you know, we have this whole preamble before starting the show,

[00:01:11] all that stuff. But before I do that, I do want to say this. Tesla was not founded originally by Elon Musk. Elon Musk did not come up with the concept of Tesla as an electric car

[00:01:24] company. It was originally founded by Martin Eberhard and Mark Tarpanion. And later on, Elon was an early investor. So this was, Tesla was founded in like June or July of 2003. And then Elon came on as an investor in February about seven months later of 2024.

[00:01:43] So he was definitely there early on. Elon was eventually given founder status through a court settlement. And along with Elon as a founder, it was JB Straubel and Ian Wright. And so there's a total of five Tesla founders, Martin Eberhardt, Mark Tarpanion, Ian Wright, who is Tesla's

[00:02:08] third employee and left the company pretty early on, and is now a, I think he does things in like electric propulsion. And then JB Straubel, who of course does redwood materials, which is battery

[00:02:20] recycling. So I don't know if this was intended or not, but Elon is not the sole co-founder of Tesla. Elon didn't even come up with the idea of Tesla. Maybe he would have eventually

[00:02:32] through, you know, his mini businesses that he started over the years, he would have started something similar. But the original credit should go to Martin Eberhardt and Mark Tarpanion. Not to say that Elon is inconsequential to Tesla, because that's definitely not true.

[00:02:48] He almost lost his entire fortune betting on Tesla and SpaceX. But to say that, you know, Tesla or Elon is Tesla's co-founder or founder, excuse me, he's not the founder, he's a co-founder. And he's a co-founder by a court settlement, not by actually founding the

[00:03:10] company. So I do think that that is important. All right, now having said that, let's go ahead and get to the intro. Hello everyone and welcome to Kilowatt, a podcast about electric vehicles, renewable energy, autonomous driving and much, much more. My name is Bode and I am your

[00:03:44] host and I almost said hello everyone and welcome to Tesla. That would have been incorrect. This is Kilowatt, not Tesla. So obviously we are going to go over Tesla's Q, not Q4. They're 2024 shareholder meeting and this is the business of the meeting. So this is how

[00:03:59] this episode is going to go. We are going to hear the shareholder proposals and then we will hear Tesla's rebuttal. Now Tesla did not actually put their rebuttal in audio form or video

[00:04:12] form. They put it in written form. So what I did is I took their written response, I put it in 11 labs, it created a voice and it created a file. So what we're going to hear is the

[00:04:22] proposal and then Tesla's rebuttal. Here's if you're new to these shareholder meetings or if you're new just to EVs or Tesla in general, most of the proposals that are put forth by shareholders, not most all of the proposals since I've been doing this, of shareholders

[00:04:42] put forth or all of the proposals put forth by shareholders, all of them have been a recommendation by the board of not passing them. No matter what that is, the board always recommends, hey, don't pass this. And as a general rule, shareholders say, okay, we're going to vote

[00:05:00] no on this and they don't pass. So this has led to shareholders, especially long time shareholders to be kind of grumpy about the way Tesla and its board do business. They do not think,

[00:05:16] or many of them I should say, don't think the board is independent enough and is too much in Elon's pocket. And I don't necessarily disagree. You got, you know, Kimball Musk, Elon's brother,

[00:05:30] you have Elon's friends on the board. It does seem that in terms of from the outside, the independence of the board has been compromised. So we're going to hear that through a lot of these proposals. And actually, I think a lot of these proposals are pretty reasonable. So

[00:05:50] the meeting started off with a legal disclaimer. And then it went into Robin Denholm's opening remarks. She is the chair of Tesla. I'm not, I like Robin, but I'm not going to go into her opening remarks because there's really nothing groundbreaking there. And this

[00:06:09] is going to be a very long episode. She talks about Cybertruck. I am seeing Cybertrucks all over the valley and they are, I've seen, you know, the regular stainless steel ones. I've seen some that are matte black. I've seen one that was piano black wrapped that looked really

[00:06:29] cool. Although it looked kind of weird. I don't think the person who did the wrap on it did a very good job on it because there's some parts on it that looked weird. I saw a white one not

[00:06:37] long ago that looked really good. Yeah, but I'm seeing them all over the valley. And when I see them, because you know, it's a stainless steel truck or a wrap truck, many people could have

[00:06:49] that color or that specific wrap. So I try to pay attention as to who's driving. I'll look at the license plates, whether they have new license plates or whether they're still using the temporary tags

[00:07:00] to try to just kind of get an idea. And I think that I've identified about 10 different Cybertrucks here in the valley where I live. And that's not just the area that I live in.

[00:07:13] When you live in the Phoenix area for a lot of different reasons, you have to travel a lot. There's a lot of driving here. And that includes, you know, North, South, East, West parts of the

[00:07:24] valley. I've seen them everywhere. Alright, let's go ahead and jump in to the first shareholder proposal. We'll listen to the proposal and then I'll come back and I'll introduce Tesla's rebuttal. And that's how we'll do this show. Oh, and I should say

[00:07:43] that the first shareholder proposal is actually proposal number six on the ballot, because you'll hear it either as the first, second or third proposal, but then they also hear the where it sits on the ballot. So this is the first one presented,

[00:08:00] but it's proposal number six on the Tesla ballot. The first one is an advisory vote regarding reduction of director terms to one year. Our board has recommended that our stockholders vote against this as explained in the proxy. This proxy, this stockholder

[00:08:14] proposal is proposed by Mr. James McRitchie, who has prepared a pre-recorded message. Thank you. We presented a similar proposal in 2021. 55% supported it, even though the board put up a competing proposal, accountability every other year instead of every year.

[00:08:37] Neither received the required 67% of shares own. 90% of the S&P 500 have a declassified board. Most institutional shareholders will again support our proposal. Join them. The recent Delaware court case identified three legal deficiencies at Tesla. Directors were not independent, the facts of the pay plan presented to investors were

[00:09:03] misleading and the board failed to negotiate properly. A major part of the cure is declassifying the board so shareholders can hold directors accountable or submit their own nominations. Matt Mascardi of Free Float calls proposal number six, the most important vote today,

[00:09:22] since it may enable investors to change the board bringing new skills and professionalism. John Chavendon's simple majority vote is the other crucial vote. Another important endorser is Nelmino, co-founder of companies including Proxy Advisor ISS. The Musk premium is already eroding.

[00:09:46] Tesla is Musk's liquid piggy bank since it's publicly traded. His other companies are not. Either he sticks around long enough to use our shareholder capital to fund his other ventures or he shifts his attention sooner if we reject his pay package and turn off the money tap.

[00:10:07] Bite the bullet, prepare for a future that doesn't depend on a superhero dictatorship. We need to transition from a board dominated by friends and family to one of expert independent directors in engineering, software and other relevant fields.

[00:10:25] Musk is a genius. I'm saddened to see him focus his attention elsewhere but it is happening. Don't let him siphon off more from Tesla. We need to transition to a more democratic Tesla that can attract customers, employees and shareholders seeking a better world ahead.

[00:10:44] Again, vote for number six and seven. Declassify the board for accountability. Lower the voting threshold for more flexibility. Vote now before the polls are closed. Your vote can make a significant difference in our future. Thank you. Thank you. Thank you Mr. McRitchie.

[00:11:08] As a reminder, the board's response was contained in our proxy statement. Okay, I think this is fair. I think everything he said is fair criticism. The thing that I think is maybe a little unreasonable is having an election for board

[00:11:26] members every single year. Maybe you do like elections every two years and you stagger the elections with the board so not everybody's up for re-election at the same time. That seems to

[00:11:37] make sense. Like you don't want to turn over an entire new board and leave people there who don't know what's going on, like hire all new people, which I don't think would happen. But

[00:11:47] yeah, it does seem to make sense having shorter terms and giving the actual shareholders an ability to propose somebody. Shareholders vote on whether or not somebody can be a board member, but they don't think they get to propose anybody. So I can kind of see where shareholders

[00:12:08] might want that power. I don't know if that's normal or not in business, but it makes sense to me. Like if I was a shareholder and I didn't like the board members, I'd like to be able to propose my

[00:12:19] own board members, especially when you have a court case like the one in Delaware that has ruled that there's a deficiency. The board is not independent. The Elon's pay plan was misleading,

[00:12:31] which whether it was or wasn't, I don't think it was. But also the board failed to negotiate properly. So there are ways of in terms of business, there are ways of doing this properly. I don't know if

[00:12:43] they did or they didn't. But I do think it's fair criticism that the board isn't independent. They are definitely allowing Elon to get away with a lot. Elon is not focusing 100% on Tesla. And that's a real sticking point for some shareholders and some don't seem to mind, but

[00:13:07] I don't care how smart you are. You can't split your time between four and five companies and give every single one of those companies your best. You might be able to do it at an

[00:13:23] adequate level like I have a friend who's super, super smart and he does eight or nine different jobs, but even that guy, he does them all remotely. Some of those jobs don't know he has

[00:13:36] other work, but anyway, he does all these things remotely because he is so smart, he can get all this work done, but even he will say that he splits his time, he can't give everybody every

[00:13:47] single one of those companies 100%. He can give them 80%, 90% at specific times, but then the rest of the time, they just fall by the wayside. And this is not only is he really smart, he's

[00:14:01] super organized and I think that that is where Elon's at. He can't give Tesla 100% of his focus. Well here's the thing, all of the other companies that Elon has right now, SpaceX, Boring Company, Starlink, which I think is still part of SpaceX, but eventually I think

[00:14:21] that will spin out into its own thing, Twitter or X and then now you have Tesla. Tesla is the only publicly traded company and you could argue that Elon has a fiduciary responsibility to be a full

[00:14:38] time CEO and not a part time CEO. And that does make, you know, that makes a lot of sense to me if you're a shareholder and you're like, I don't want somebody running my multi-billion

[00:14:53] business that I've invested in. I don't want somebody who's only splitting some of their time there. So I can get where people are upset about that. Now let's go ahead and hear Tesla's rebuttal and

[00:15:05] I promise I will not comment so much on every single proposal, but I do think that we're going to hear a lot of these same things going forward through the shareholder proposals.

[00:15:16] So I'm just saying them now so I don't have to say them then. So here's Tesla's rebuttal. At the same time, the board continuously evaluates our corporate governance structure, practices and policies and also weighs feedback from our stockholders as well as the stockholder

[00:15:57] proposals we have historically received for our annual meetings of stockholders. The stockholder proponents main justification in proposing board declassification is to increase director accountability and responsiveness to stockholders. This fails to account for a history of stockholder engagement and responsiveness to stockholder proposals by our board, which includes

[00:16:19] amending the bylaws of the company to enable proxy access and recommending management proposals in past years to reduce director terms and eliminate applicable supermajority voting requirements. Our board maintains an active year-round dialogue with our stockholders and is committed to supporting our efforts to enhance engagement.

[00:16:40] As such, we do not believe declassifying the board would serve to enhance the robust process we are already currently undertaking. As the stockholder proponent acknowledges, our current certificate of incorporation and bylaws require the affirmative vote of at least 662-3% of the total

[00:16:59] outstanding shares entitled to vote in order to approve an amendment to reduce the terms of our directors. Without achieving the required stockholder participation rate, the board would not have the authority to implement declassification even if it wished to do so.

[00:17:16] As disclosed in our 2023 proxy statement, the board has determined that once we have achieved a total stockholder participation rate of at least 65% at a stockholder meeting, the board will again propose certification of incorporation and bylaw amendments to

[00:17:33] eliminate supermajority voting requirements. To the extent such proposal to eliminate supermajority voting requirements achieves the required threshold to pass, it will unlock a gateway for our board and stockholders to adopt further stockholder-driven governance actions including without limitation

[00:17:51] the declassification of the board. As a result, because our board has already shown through its actions its responsiveness to stockholders and commitment to a governance framework that we believe will ultimately maximize value to our stockholders. Our board recommends against this

[00:18:10] proposal. I'm just going to say this so that we can move on to the next proposal. That little bit where Tesla says, hey, we want to do this. We want to be responsive to what you want,

[00:18:25] but we don't have enough people voting right now. And because we don't have enough people voting right now, we're not going to try because it won't pass anyway. So yeah, we're going to pass on this and

[00:18:37] we recommend that you do as well. That does tend to come up quite a bit I think in some of these rebuttals. So just keep an eye or an ear open for that. Let's go ahead and get to

[00:18:51] proposal number two, which is shareholder proposal number seven on the ballot. So here it is. The second stockholder proposal is an advisory vote regarding simple majority provisions in our governing documents. Our board has recommended against and are set forth for the reasons in

[00:19:09] the proxy. This stockholder proposal is proposed by Mr. John Chavedin who is on the line to present this proposal. Mr. Chavedin, I would like to invite you to speak. You will have three minutes. Three minutes. Hello, this is John Chavedin. Proposal seven, simple majority vote.

[00:19:31] Charles requested the board of directors take the necessary steps so that each voting requirement in the charter and bylaws, the calls for a greater than civil majority vote be replaced by a requirement for a majority of the votes cast for and against such proposals

[00:19:45] or a simple majority. This includes making the necessary changes in plain English. This proposal seven is the exact same concept that the Tesla board of directors supported at the 2022 Tesla annual meeting. The 2022 Tesla board of directors proposal then won 98%

[00:20:05] support from the Tesla shareholders who voted and the board of directors version of this proposal would have been adopted earlier if the board of directors had only made a slight effort to encourage more Tesla shareholders to vote for their proposal. This simple majority vote

[00:20:23] standard proposal will help improve Tesla shareholder rights. Tesla now scores a dismal 10 and shareholder rights with 10 being the worst possible score. The Tesla board of directors supported this proposal concept in 2022 and should do so today. Sure, the rights and a simple majority

[00:20:43] vote standard are all the more important when Tesla has a CEO Elon Musk who is threatening to give less attention to Tesla and threatening to withhold advanced technology from Tesla unless he gets a $56 billion paycheck. Never before have shareholders been under such

[00:21:01] duress when asked to prove an outrageous $56 billion CEO paycheck. Plus, there's no promise with the $56 billion paycheck that Mr. Musk will devote any minimum percentage of his time to Tesla or pursue any minimum amount of advanced technology at Tesla. Russ Gerber of the

[00:21:23] investment firm Gerber Kawasaki said, I believe the Tesla board of directors is the most conflicted, least independent and most incapable board of directors in the history of business. Please vote yes. Simple majority vote proposal seven. Thank you Mr. Chavad.

[00:21:44] As a reminder, our board's response is set forth in the proxy. Okay, so I promise that I wasn't going to speak for a long time in between these, so I'm just going to say he mentioned there that, first he mentioned a lot of things that

[00:22:00] the other gentlemen had mentioned and some of these other shareholders are going to mention as well in terms of Elon's time and the pay package and all that stuff. But he also mentioned that

[00:22:10] the proposal that Tesla had put forth that similar to proposal seven in 2022 would have passed the board put a little bit more effort into getting it to pass. Tesla's board has shown that they're capable of getting everybody out there and riled up to vote because they did that

[00:22:31] for Elon's pay package. So again, I am not a business person. I do not understand the complexities of business, especially at a corporate level. But it does seem like a good idea to have

[00:22:49] certain things that are maybe a simple majority vote and certain things that are a two thirds majority vote of all shareholders simply because you know, that's a good way to ruin a company if

[00:23:01] you get a bunch of activists in there. And that doesn't make a whole lot of sense for the simple majority side of things. All right, let's hear Tesla's rebuttal. The board determined that once we have achieved a total stockholder participation rate of at least 65%

[00:23:41] at a stockholder meeting, the board will again propose certain things that are likely to be passed. According to the board, the board will be able to approve such a stockholder participation rate. According to the board, the board will be able to approve such

[00:23:56] a stockholder participation rate of at least 65% at a stockholder meeting. Of at least 65% at a stockholder meeting, the board will again propose certificate of incorporation and bylaw amendments to eliminate supermajority voting requirements. The stockholder proponents stated that because this proposal topic was approved by more than

[00:24:18] a majority of Tesla stockholders at the 2020 annual meeting, it should have been adopted in 2020. This statement is inaccurate and demonstrates a substantial lack of understanding not only of governance and Tesla's governing documents, but also of our prior actions and

[00:24:36] disclosures. In fact, following the simple majority approval of the similar 2020 proposal, Tesla put forth a proposal for adoption of amendments to our certificate of incorporation and bylaws to eliminate applicable supermajority voting requirements in our 2021 proxy statement. Therefore, the actions of the Nominating Incorporate Governance Committee and its

[00:24:59] chair, Ira Aaron Price and the board were appropriately responsive to the majority-supported 2020 proposal and stockholder were asked to vote on the matter. However, the 2021 management proposal to amend the certificate of incorporation failed to achieve the requisite affirmative vote

[00:25:19] of at least 662 to 3% of the total outstanding shares entitled to vote are stockholder and thus could not be validly adopted. Accordingly, the current proposal is factually incorrect and misleading in its characterization of our board's governance and prior actions.

[00:25:38] As previously disclosed in our 2023 proxy statement, once we have achieved the threshold participation rate at a stockholder meeting, the board will again propose certificate of incorporation and bylaw amendments to eliminate supermajority voting requirements.

[00:25:54] So it's becoming very clear that Tesla's board is like, I will gladly pay you Tuesday for a hamburger today because they could literally, if they wanted to, they could literally put the same amount of

[00:26:04] effort into any of these proposals that they say, hey, we're going to do this, but we're going to do it when we have enough people showing up to vote so it'll actually pass. We're going

[00:26:15] to do that. They could put that same energy that they put into Elon's pay package just recently. They offered tours of the Gigafactory with Elon and Franz van Holzhousen. I follow Tesla on Twitter or on X, and I got tons of updates saying, hey, make sure to vote

[00:26:38] your shares even though I'm not a shareholder. They had Robin Denholm contacting certain retail investors. They could put that same effort into those proposals that they did into Elon's pay package if they wanted to. And if it fails, it really doesn't cost them that much.

[00:27:00] It costs them some time, maybe a little bit of money, but it's not the end of the world. In most cases, or maybe in every case, I haven't really gone back to look, but the shareholders vote based on the board's recommendations. Well, I guess that's not entirely

[00:27:20] true because they voted against the board's recommendations on two of the shareholder proposals and we'll get to that at the end. But yeah, just kind of an interesting attitude. And also, some of the language in the board's rebuttal is it seems to be,

[00:27:44] to me from the outside, it seems to be dismissive. Like, hey, there's a fundamental misunderstanding of X, Y and Z and how the board works. And in some of those cases, I don't think that's fair. I think that's diminishing what the shareholder is saying in the proposal.

[00:28:03] Like from the outside, these people seem like sophisticated shareholders. If I was to submit a proposal, I guarantee you, I would sound like an idiot and they would probably have every right to talk in that way to me. But these people seem to be sophisticated in regards to

[00:28:24] you know, how this whole system works. So I find that a little bit off-putting. All right, let's get into our next proposal. Our third stockholder proposal is an advisory vote regarding annual reporting on anti-harassment and discrimination efforts. Our board has

[00:28:41] recommended against for the reasons set forth in the proxy. This stockholder proposal is proposed by the New York State Common Retirement Fund as the lead filer, which has requested that Dr. Kristen Hall as represented for NIO Impact Capital as

[00:28:55] co-filer for this proposal present this proposal. Dr. Hall, I would like to invite you to speak. You have three minutes. Thank you. Hello, I'm Dr. Kristen Hall of NIA Impact Capital. I'm here on behalf of lead filer New York State Comptroller Thomas D.

[00:29:15] Pauli, trustee of New York State Retirement Fund. Owner of Tesla shares valued at over 650 million as of March of this year. And I'm here as a co-filer of proposal eight. The fund is a significant long-term owner of Tesla and has an explicit focus on investing in climate solutions.

[00:29:37] Longview Large Cap Fund through its trustee amalgamated bank, AP7, and Arjuna join us in filing this resolution. Our firm named NIA means intention and purpose. We invest only in those companies we see building toward a better world,

[00:29:53] a sustainable and inclusive future. As the founder of NIA, I had been proud in our early ownership of Tesla. I saw the potential and the need for innovation in the automotive and the clean energy market space. However, when looking under the frunk, we find failures in

[00:30:13] workplace management, one of the most important components of any business. Employees need to be hired, trained, motivated, and engaged to do high quality work. And we need those employees to be able to contribute to their top ability. To do so, they must feel both physically and

[00:30:34] emotionally safe at work. Investors are requesting the report outlined in proposal eight because workplace abuse, harassment and discrimination have no place at Tesla. They can result in substantial costs including employee turnover, increased absenteeism, and reduced productivity,

[00:30:54] as well as legal costs, all of which can in fact shareholder's investments in the company. They may also lead to difficulties in recruiting high quality employees, something that Tesla needs to remain innovative and at the forefront of a quickly moving

[00:31:11] technological landscape. We have expressed concerns about Tesla's workplace for years. And year after year, more harassment and discrimination allegations have emerged with few visible improvements in Tesla's people management policies or practices to assuage our concerns. Lawsuits and class actions before Tesla now involve thousands of employees,

[00:31:37] with allegations including repeated use of racial epithets by managers and employees, segregation and discrimination against non-white employees in job assignments, pay and promotion, and retaliation when employees report their experiences. These concerns are why I now formally move proposal eight, requesting that Tesla's board commission an independent report

[00:32:03] on the effectiveness of the company's efforts to prevent harassment and discrimination within this revolutionary and innovative workspace. Thank you. Okay, that's pretty straightforward. Let's go ahead and listen to the rebuttal. The board has considered this proposal

[00:32:22] 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

[00:32:35] 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.

[00:32:53] 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,

[00:33:12] our compensation committee reviews and oversees human capital management practices relating to our employees. Our commitment to a safe workplace begins with training and prevention. We require every employee to review and acknowledge our code of business ethics and policy against

[00:33:30] discrimination and harassment in the workplace, and they are required to participate in an in-depth and interactive anti-harassment and anti-discrimination training. Anti-harassment training is conducted on day one of new higher orientation for all employees and reoccurring for leaders and other employees. Collectively, this ensures that all employees

[00:33:53] understand how to create and promote a respectful workplace, assess potential situations sooner, and escalate appropriately. In addition, we run various leadership development programs throughout the year aimed at enhancing leaders' skills and, in particular, helping them to understand

[00:34:09] how to appropriately respond to and address employee concerns. While our goal is always prevention, reported complaints of discrimination and harassment are promptly investigated and, if substantiated, subject to appropriate remedial measures up to and including termination.

[00:34:29] We have a dedicated team of employee relations partners who conduct impartial investigations into employee concerns and support overall positive workforce engagement. We encourage employees to raise concerns internally or externally. An employee can raise concerns or complaints

[00:34:47] to any member of management, human resources, or employee relations. If they prefer to report another way, our integrity line is available to every employee globally 24 hours a day, seven days a week. The integrity line allows employees to report concerns anonymously and without fear of retaliation.

[00:35:08] Human resources, together with employee relations, will ensure that employee concerns are investigated promptly and impartially in a manner appropriate to the circumstances. We believe that the information requested by the stockholder proponent would not assist our stockholders in assessing whether we are improving our workforce management,

[00:35:30] but rather drive confusion and misunderstanding. We remain committed to creating and maintaining a respectful and inclusive workplace and the steps we have taken to prevent and address harassment and discrimination throughout our workforce and will continue to challenge

[00:35:47] and defend ourselves against any allegations to the contrary. We believe that our active board oversight, existing policies, and dedicated team effectively address the issues targeted by this proposal. Well, Tesla may believe that they're doing everything that would address what the

[00:36:07] people want in this proposal, but the shareholders don't. And the thing where I think the disconnect is, is I didn't hear them say that they wanted to have, and maybe I'm wrong, correct me on

[00:36:22] this. I didn't hear them say that they wanted to have direct input in this regard in terms of workplace harassment and all the things that go along with that. What I heard was is they wanted

[00:36:36] to have some transparency and to ensure that Tesla was doing what was asked. And by submitting a report, a transparency report, Tesla does this for their suppliers and a bunch of other stuff, by submitting a transparency report, it doesn't seem like that would add confusion.

[00:36:55] One of the things that frustrates me, and it frustrates me in a big way, is when some, and it doesn't, this isn't just for Tesla in general, this is for everything in life. When someone is asking for more transparency, whether that's from a person or from a group,

[00:37:14] the answer back when the answer back is, well, that's just going to cause confusion. That is a lazy answer. If something's just going to cause confusion, then you need to figure out a different way to present it. So it's not causing confusion.

[00:37:32] If you're concerned that doing such a report is going to make your company look bad, then yeah, it's going to make you look bad for one year, two years, three years until you fix

[00:37:46] those problems. But you know what also makes your company look bad? A bunch of other people out there saying that your company sucks when it comes to workplace harassment. That also makes you look bad. So if you can come with receipts and say, hey, you know what,

[00:38:00] here are the places that we need to improve. Tesla has 140,000 employees. There is not a world where that doesn't happen at Tesla. It's got 140,000 employees. What Tesla does about it after it happens, that's what's important. And if I were a shareholder, I would want

[00:38:19] to know this information as well. This would be really important to me as a shareholder. Now, do I think that Tesla is out and out doing anything wrong in this regard? No. Again, they have 140,000 people. It's really hard to manage all of those folks. And there's

[00:38:38] probably, unfortunately, this kind of thing is happening. And hopefully it's being taken care of immediately. And it's not becoming like a company culture. But I do read a lot of stories and come

[00:38:53] across a lot of stories about Tesla's labor practices, and I don't always bring them on to the show. But it is something that's out in the world. And whether that's fair or not towards Tesla,

[00:39:04] it is something that people are talking about. So I totally see you. Or I can completely understand why shareholders would want to know this information. All right, let's move on to our next proposal. Let's turn to the fourth stockholder proposal, which is an advisory vote regarding

[00:39:20] the adoption of freedom of association and collective bargaining policy. Our board has recommended against for the reasons set forth in the proxy. This stockholder proposal is proposed by SOC Investment Group, whose representative, Tezo Patel, has prepared a pre-recorded message.

[00:39:41] Hello, I'm Tezo Patel, the executive director of the SOC Investment Group. And I hereby move proposal nine, a shareholder proposal requesting that Tesla board of directors adopt and disclose a non-interference and collective bargaining policy that upholds international labor rights

[00:39:56] standards in its operations. This resolution was submitted with other co-filers, and we are concerned that Tesla's existing policy fails to clearly explain how conflicts between international and local labor law will be resolved. And because of clear indications that Tesla is not adhering to

[00:40:13] its current policy despite the operational, legal, human capital management, and reputational risks involved. We recognize that Tesla revised its global human rights policy in April 2023 to explicitly refer to the rights of workers to free association and collective bargaining,

[00:40:29] but these revisions were fatally compromised. The statement committing to respect these rights includes the qualifier in conformance with local law, rather than referencing the often higher international human rights standards, suggesting that Tesla respects these rights

[00:40:45] only as explicitly required by local laws. Numerous signs suggest that Tesla is not respecting its workers' fundamental rights. In Sweden, Tesla has faced months-long strikes and boycotts over what has been characterized as a refusal to bargain. Moreover, as part of

[00:41:01] its reporting on the situation, Reuters wrote that Tesla has a policy of not signing collective agreements, which if true would directly contraven the company's current policy. In Germany, Tesla faces allegations of refusal to bargain and poor working conditions.

[00:41:17] In the United States, Tesla has had adverse decisions by the Full National Labor Relations Board and the U.S. Fifth Circuit Court of Appeals over labor rights violations. Just last month, the NLRB issued a complaint alleging that restrictions in Tesla's workplace

[00:41:34] technology policies served to unlawfully discourage employees from joining unions or acting concertedly. It is also relevant for shareholders to consider the broader human capital management risks Tesla faces, including reports of higher health and safety violations and injury rates than peers, and numerous lawsuits alleging of hostile work environments.

[00:41:57] Freedom of association and collective bargaining are considered enabling rights, meaning that they empower workers to effectively advocate for additional labor rights, including the right to a safe and healthy workplace free from discrimination. The adoption of a comprehensive labor rights policy that clearly articulates a commitment

[00:42:14] to non-interference, good faith collective bargaining, and adherence to higher international standards would help Tesla better mitigate these human capital management risks, as well as operational and reputational risks like we are seeing in Sweden. Therefore, we urge you to vote for item nine. Thank you.

[00:42:34] Thank you, Ms. Patel. The board's response is set forth in the proxy. Okay, many of you know that I am a proud union member. Many of you know that I tend to fall on the side of labor when it comes to disputes between labor and management,

[00:42:53] because that's where my biases are. However, I do think that I am reasonable in recognizing that labor unions are not... There should be a balance in power between labor and management. It should not be wholly one-sided holds all the cards. That causes problems.

[00:43:17] And I do acknowledge that labor unions in the past have had their own set of problems and have not done a lot to help out their brand, let's say just as in general. But as a general role,

[00:43:33] most labor unions I think are fair and they're not wanting to tear the company down or tear the company apart because that wouldn't work in their best interest. So the businesses have their point of view and what's best for the business, and then the employees have what's

[00:43:53] best for them. And those two organizations need to negotiate and come to a happy middle ground so that the business can function and the employees can be happy and the company can be happy. I don't think that should be very controversial. So having said all of that,

[00:44:13] Tesla and Elon, mostly Elon here has not had very nice things to say about labor unions. Not long ago, a couple years ago, Elon wrote a tweet and I can't remember what the tweet was

[00:44:26] exactly, but it was something like Tesla employees could vote to organize tomorrow. But why would they want to give up their stock options? And the National Labor Relations Board here in the US saw that as a threat because if let's say all 140,000 employees of Tesla organized,

[00:44:52] which would be unlikely, but let's say all of them organized and they went to the negotiation table and Tesla was like, yeah, we're not giving you anything. That's negotiating in bad faith and that's illegal. Also, that's considered a threat because Tesla doesn't have to give up

[00:45:15] the stock options. They don't have to tell the employees if you unionize, we're going to take this away. That's not how that works. The labor unions are there for three main functions, wages, hours and working conditions. So how much you make, how long you work, and what conditions

[00:45:35] under which you work. Now, there's other things that can be put in a contract, but really those three things are what labor unions do, at least here in the United States in my experience.

[00:45:44] So the National Labor Relations Board said that that tweet or post that Elon did was considered threatening and Elon was forced to delete it. He also went on NBC and was interviewed

[00:45:57] and I'll try to remember put the link in the show notes if I don't email me and I'll send it to you. Anyway, Elon said that he doesn't like labor unions because he doesn't like the idea of a

[00:46:06] Lord's and Peasant's system, which is ridiculous for a man who just got multiples of billions of dollars in pay compensation when a large percentage of his company got laid off and just sent to the wilderness. And he got multiples of billions of dollars. And you got shareholders

[00:46:28] complaining that his focus is not Tesla, it's all these other companies and all this other stuff that he's doing, whether that's true or not. It still doesn't look good when you get let's say between 40 and 50 billion dollars in pay compensation. And then you're saying, well,

[00:46:44] unions cause this Lord's and Peasant kind of dichotomy. That's not the case. In any organization, whether it's a union or there's a business or whether it's a combination of both, you have a hierarchy. The job that I work at right now, there is a hierarchy. You know,

[00:47:02] you have the fire chief and then you have a number of chiefs below him or her. And then you have captains and engineers, and then you have firefighters. But within firefighters, you have senior firefighters. There's already a hierarchy built in this,

[00:47:20] in these professions. And the same thing goes when you work in the mall at a retail store, you have your managers and you have your leads and you have your trainers and all that

[00:47:30] other stuff. And you have your people who've been there for a really long time. They don't really hold an official title, but everybody goes to them because they respect them. There's a hierarchy that's official and unofficial that builds up. And you know, sometimes the hierarchy in unions

[00:47:43] is corrupt and that has 100% true. Sometimes those higher ups do things that they shouldn't do, but also that same thing happens with companies. So anytime you enter into a situation where you have more than a few people working, there's a potential for that hierarchy

[00:48:02] of lords and peasants to exist. That has nothing to do with unions. And I've talked a lot about the Tesla Union stuff in the past and I got mixed feedback. I'd say it's 50-50 and people are like,

[00:48:16] I don't agree with you. People are like, I do agree with you. And there were some people who went even further than I did and down the road of labor in Sweden, but letting people choose without being encumbered by threats or managers going to specific trainings

[00:48:35] on how to discourage your employees from unionizing by allowing your employees to do it to choose whether or not to organize, I think is really important. And here in the United States,

[00:48:48] against the law, to do some of that anti-union stuff that a lot of these companies are doing, like they dance a very fine line. But my point to this is to kind of explain and give some context

[00:48:59] before you hear Tesla's rebuttal. So let's go ahead and hear the rebuttal to proposal. I think this is number four, but technically it's number nine on the voting ballot. The ethical treatment of all people in regard for human rights is core to our mission of

[00:49:16] promoting a sustainable future. We endorse and base our definition of human rights on the United Nations Universal Declaration for Human Rights, UDHR. The UDHR focuses on dignity, respect, and equality without discrimination and recognizes the right to freedom of association and collective

[00:49:34] bargaining. Our commitment to human rights is so deeply ingrained in our values that we also require all of our suppliers to follow our supplier code of conduct, which mandates our suppliers to respect the right of all workers to form and join trade unions of their own choosing,

[00:49:51] to bargain collectively, to engage in peaceful assembly, as well as respect the right of workers to refrain from such activities. Our suppliers must allow workers and or their representatives to be able to openly communicate and share ideas and concerns with management regarding working

[00:50:11] conditions and management practices without fear of discrimination, reprisal, intimidation, or harassment. We have more than 140,000 employees worldwide and we comply with all applicable local laws related to freedom of association and collective bargaining and respect

[00:50:32] internationally recognized human rights in all the areas we operate. Our global human rights policy specifically sets forth that Tesla respects the right of workers to form and join trade unions of their own choosing, to bargain collectively and to engage in peaceful assembly as well as

[00:50:51] respect the right of workers to refrain from such activities. In Germany, we have established a works council which advocates for employees and acts similarly to a union. In the US, we share information with employees on their rights under the National Labor Relations Act and we provide every

[00:51:10] manager training on employee rights including the freedom of association. Along with our policies and the actions we have taken to protect our employees rights, we also provide our employees multiple methods to report any concerns or grievances. Tesla has been built upon a culture of

[00:51:28] open communication and employees have the right to freely discuss their wages, benefits, and terms and conditions of employment. They also have the ability to raise complaints internally or externally. We encourage employees to bring any concerns or grievances they may have to any

[00:51:47] member of management or their HR partner. We also operate an integrity line which is available 24 hours a day, 7 days a week for employees to anonymously report concerns without fear of retaliation. In addition, our global take charge program enables employees to report

[00:52:06] issues and suggestions on safety, security, and work practices with the option to report anonymously. All issues and suggestions are responded to and tracked to closure. HR and management routinely conduct round tables with employees to understand employee pain points

[00:52:24] and barriers impacting their ability to complete operational goals. These direct feedback mechanisms allow employees to be involved in shaping their workplace and supports agile decision making from leadership to address their requests or concerns. A talented and engaged

[00:52:41] workforce is central to our mission to accelerate the world's transition to sustainable energy. In order to recruit and retain this workforce, Tesla is committed to, among other things, regular and meaningful engagement with our employees, a robust culture of safety,

[00:52:58] and highly competitive compensation programs. We offer wages and benefits that meet or exceed those of other comparable manufacturing jobs in the regions where we operate, and we recently increased our base pay even further for much of our workforce.

[00:53:12] In addition, unlike other manufacturers, the vast majority of our employees have the opportunity of receiving equity, which can result in significantly higher compensation beyond our already industry competitive total compensation. We believe our policy and actions speak

[00:53:29] for themselves and our commitment to our employees. The stockholder proponents cites to the United Nations as an international standard, and as stated above, we already endorse the UDHR in our practices. Rather than looking at Tesla's commitment and actions, the stockholder proponent only desires

[00:53:48] Tesla to expend resources to create and maintain a policy framework and additional administrative bureaucracy set to the stockholder proponent's own standards. This will not meaningfully alter Tesla's commitment to human rights, nor create additional benefits to our employees or value

[00:54:05] for our stockholder. Therefore, as we believe that we have already included adequate disclosure with respect to employee rights, are actively engaged in protecting these rights and have devoted substantial resources to creating a healthy culture, we do not believe in implementing this

[00:54:22] proposal. Okay, so I've already said quite a bit about this in terms of the proposal. I want to leave it with one thing. Elon mentioned in the question and answer portion of the show where

[00:54:36] he said that employees at Tesla are happy. He's like, I work with them, I know them, and they're happy. And to that, I say, do you go to any of the barbecues? Have you invited them to your house for dinner? Have you, do you know about their children?

[00:54:55] Or do you just work with these folks? And my point to all this is like, when you're an employee and you are co-workers or maybe you have an employee supervisor or maybe even a supervisor above your

[00:55:09] supervisor, you can have certain conversations that you can't have with the CEO of the company, especially when the CEO of the company has a habit of firing people or berating people on the line,

[00:55:23] which we have heard about in the past, that does not give them, afford them any real protection. Now they have the protections that are granted to them to the states that they work in or the

[00:55:38] federal government's labor protections. But if Elon, in a lot of cases on right to work states, Elon has yelled at engineers, fired them on the spot. They don't get, you know, there's probably some sort of arbitration that happens at a state or federal level

[00:55:55] where they can fight it. But really, in the United States anyway, in my experience, arbitration is oftentimes non-binding. So even if the arbitrator rules in favor of the employee, and this isn't every state, I'm sure there are more states that are more labor friendly,

[00:56:16] but in right to work states, even if the arbitrator rules in favor of the employee, it's non-binding. So maybe that sets up a civil suit later. I don't know, I'm not a lawyer.

[00:56:27] But my point is like Elon, when he's on the floor and he's working with these people, they don't see him as a coworker. They see him as a CEO. And he's a CEO with a lot of power.

[00:56:43] And if they mess up, they say something that they shouldn't say, or if they disagree with him, there's always that concern that they could be fired. And again, it's happened in the past. So we know it's happened in the past. There's been lots of labor, labor suites brought

[00:57:01] against Tesla for this kind of thing. So my point is what Elon sees is not necessarily reality. And then also these folks having a little bit extra protection isn't necessarily a bad thing. All right, let's move on to the next proposal, which is proposal 10.

[00:57:22] The fifth stockholder proposal is an advisory vote regarding reporting on effects and risks associated with electromagnetic radiation and wireless technologies. Our board has recommended against for the reasons set forth in the proxy. This stockholder proposal is proposed by Lendro

[00:57:39] Purcell, who's represented Dr. Debra Davis, has prepared a pre-recorded message. I am Debra Davis, founder of Environmental Health Trust. I am speaking with you today on behalf of shareholder Lendry Purcell regarding her proposal seeking an annual report

[00:57:57] on the risks for magnetic fields and wireless radiation in their products. I'm also speaking on behalf of millions of young children, infants and toddlers, and pregnant women who are more vulnerable to wireless radiation according to the American

[00:58:12] Academy of Pediatrics. I'm the founding director of the Board on Environmental Studies and Toxicology from the National Academy of Sciences, and I've published more than 220 scientific articles on environmental health and have concluded, along with hundreds of other experts,

[00:58:28] that current exposures to non-ionizing electromagnetic fields called EMF constitute a serious and unrecognized public health risk. Tesla vehicles operate with the 1200 pound battery that emits magnetic fields and also uses wireless equipment such as Wi-Fi and radar emitting wireless radiation. Tesla should provide transparent information on measured exposures

[00:58:52] and efforts to reduce them. The World Health Organization has concluded that both low levels of EMF and microwave or cellular radiation are, quote, possible carcinogens, the same category as some pesticides and gasoline. The companies that provide secondary insurance like Lloyds of

[00:59:09] London and in Swiss Re have long considered electromagnetic fields to be uninsurable, comparable to asbestos due to potential health and environmental damages. Tesla shareholders have a right to know how the company ensures itself against such risks. The fact that current

[00:59:26] levels may be legal does not mean they are safe. In fact, US regulations were set more than a quarter century ago. It has been three years since the US Circuit Court of Appeals for the District

[00:59:38] of Columbia determined that the FCC had been, quote, arbitrary and capricious in its failure to consider all of the science and refusal to update wireless limits. Tesla has failed to inform consumers about the measured levels of magnetic fields and wireless radiation within

[00:59:54] the automobile or their other products. Infants and toddlers by law are strapped into seats to protect them during crashes, but they have no protection from EMF that can go more deeply into their thinner skulls. To mitigate risks for Tesla, the company could shield its vehicles and ensure

[01:00:11] wireless antennas could be easily turned off. Hardware and software changes can lower exposures generally. Tesla has developed extremely rigorous compliance and hazard screenings beyond regulatory requirements for certain toxic chemicals. Investors can encourage the company

[01:00:29] to take a similar leadership role regarding reducing EMF. It's time for the company to unambiguously compete on safety regarding wireless radiation and non-ionizing radiation emitted by its products. Thank you. Thank you, Dr. Davis. The board's response is set forth in the

[01:00:49] proxy. Okay, so I don't really have much to add on this and we're going past an hour, so I'm gonna go ahead and play you the rebuttal. The board has considered this proposal and determined

[01:01:01] that the proposal would not serve the best interests of Tesla or our stockholders as Tesla is already deeply dedicated to the safety of its products and the reporting requested by the stockholder proponent would divert the company's resources and not drive stockholder value.

[01:01:17] At Tesla, safety is at the core of our product design. While our vehicles are known for their safety from a collision standpoint, earning top ratings from various government entities across four continents, we also strive to make sure that our products are safe during the

[01:01:33] course of ordinary use including with respect to the electromagnetic and radio frequency, RF radiation of our vehicles and the wireless components incorporated into them. For example, we have a dedicated team ensuring compliance of our wireless components with FCC standards.

[01:01:52] All our radio components like Bluetooth, sensors, Wi-Fi and cellular components are tested by third parties accredited by the FCC and all components are within the limits set by the FCC. In fact, the Tesla owner's manual lists the FCC and ICED certifications of the radio components in

[01:02:12] our vehicles and reports of the tests conducted by the FCC accredited third parties and the component certifications are publicly available on the FCC's website. Our vehicles also comply with regulatory requirements relating to electromagnetic emissions such as the United

[01:02:29] Nations Economic Commission for Europe Regulation 10. In addition, in designing our vehicles, we exceed regulatory requirements by taking into account the guidelines relating to the protection of humans exposed to radio frequency electromagnetic fields as set forth by the International Commission on Non-Ionizing Radiation Protections RF EMF Guidelines 2020.

[01:02:55] Our vehicles are well within such guidelines. In support of their proposal, the proponent states that the FCC has not materially updated its wireless radio frequency RF radiation emission guidelines since 1996 despite the ubiquity of human exposure in everything from our modems,

[01:03:15] devices and vehicles implying that the FCC has ignored the technological changes of the past 28 years. This statement is misleading. In fact, as recently as 2019, the FCC requested guidance from the FDA on standards relating to RF exposure as new technologies

[01:03:33] are introduced including 5G. 1. The FDA responded, we have reviewed the result and conclusions of the recently published study in the context of all available scientific information and concluded that no changes to the current standards are warranted at this time.

[01:03:53] The FDA further added, the available scientific evidence to date does not support adverse health effects in humans due to exposures at or under the current limits. Further, in its current consumer guides, the FCC states, while these assertions, suggestions that

[01:04:11] wireless device use may be linked to cancer and other illnesses have gained increased public attention. Currently, no scientific evidence establishes a causal link between wireless device use and cancer or other illnesses. At this time, there is no basis on which to establish a different

[01:04:29] safety threshold than our current requirements. 3. Finally in 2020, the FCC updated its guidelines to amend its RF exposure evaluation procedures and mitigation measures to help ensure compliance with existing exposure limits for, thus the FCC guidelines have not been materially updated,

[01:04:50] not because of a failure to take into account new technologies or risks as the proponent suggests, but rather because there has been a reasoned conclusion that changes to the exposure limits thus far have not been warranted. Further, the proponent also argues that the insurance

[01:05:06] industry views the risk of wireless radiation exposure is rated a high risk impact, citing two publications which purport to support this view. However, the proponent's statement is misleading, as it fails to note that the potential concerns over cybersecurity, data privacy and espionage

[01:05:25] rather than solely emissions concerns are factors driving the risk profile attributed by insurers to the general emergence of wireless and 5G technologies. For the reason stated above, the board feels strongly that the requested report would be an unnecessary diversion of

[01:05:43] the company's resources with no corresponding benefit to Tesla, our stockholders or consumers. I actually agree with most of what Tesla's rebuttal is, with the exception of, I do think that there is value in Tesla releasing this report. I do think that there is value in Tesla

[01:06:04] letting third parties look at the technologies that they use, the off-the-shelf technologies, maybe not the proprietary stuff that Tesla wants to keep their special sauce secret, right? I do think there's value in letting third parties look at this stuff and evaluate because

[01:06:23] it doesn't seem like radio waves or RF signals cause any harm, but it also doesn't hurt to continue studying it to make sure that that's still the case. If we were going to spend

[01:06:37] this in a positive way, we could spend it as if Tesla is doing everything humanly possible to make the cars as safe as they can, which is what they're saying, then releasing a report

[01:06:50] on the wireless and RF technologies that they're using would, they could point to that and say, hey, look, here's all the things that we're doing. Here's everything that's in our car that's safe

[01:07:04] and I don't see a downside other than it would cost them a little bit of money. I don't think in the grand scheme of things this would cost them that much time or money. There's a whole

[01:07:12] organization lead the charge that puts out this massive document every year we've had them on the show and that's all done with volunteers, with, you know, we're industry experts. I'm sure that Tesla could partner with somebody and produce a transparency document that would satisfy

[01:07:34] the shareholders request here without much effort. And honestly, I guess what's really bugging me about Tesla's rebuttals is they make it sound like it's a whole waste of resources from the company standpoint when they put resources into getting Elon his money. And I don't have

[01:07:54] a problem with Elon getting his money or them moving Tesla to Texas, that's a vote shareholders voted on and is it a massive amount of money? Absolutely. When they gave them the pay

[01:08:07] package, did it look like Tesla in 2018 was going to succeed? No. So I understand the risk reward there Elon was willing to meet a bunch of goals to get the money. Whether or not a single human needs $56 billion or $40 billion, that's not for me to decide.

[01:08:31] But when you put time, effort and resources into getting one person tens of billions of dollars, you can put time, effort and resources into something that would probably cost you less than $100,000 to produce every year. And it might even be less than $25,000 to produce every year.

[01:08:52] Because if all of your suppliers have this documentation, you're just paying somebody like an intern to gather up all this information and then put it in a pretty report and then filing it.

[01:09:04] It's probably not even that much. So my problem with the rebuttals is it makes it sound like this is going to tax the company somehow and it's not. It is not going to be a tax on their resources.

[01:09:20] All right, let's move on to our next proposal. Two more left. Let's move on to the sixth stockholder proposal, which is an advisory vote regarding adopting targets and reporting on metrics to assess the feasibility of integrating sustainability metrics into senior executive

[01:09:35] compensation plans. Our board has recommended against, for the reason set forth in the proxy, this stockholder proposal is proposed by Tulip Share Securities Limited, whose representative, Constant Ricketts, has prepared a pre-recorded message. Good afternoon, fellow shareholders. Thank you for your time. I'm Constant Ricketts and today

[01:09:59] I'm speaking on behalf of Tulip Share in support of Proposal 11, urging Tesla to integrate sustainability metrics including diversity among senior executives into executive compensation plans. This proposal calls for robust quantitative targets and transparent reporting to both

[01:10:19] resolve executive pay plan controversies and ensure our company's long-term stability and success. Diversity and independence and leadership are essential for innovation and enhanced decision making, while sustainability metrics and executive compensation reflect alignment with regulatory pressures, investor expectations and responsible business practices.

[01:10:42] Despite 75% of S&P 500 companies incorporating sustainability metrics into executive pay plans, Tesla fails to do so. This is especially concerning given our mission to accelerate the world's transition to renewable energy. The recent ruling that voided our CEO's $56

[01:11:04] billion pay package highlighted the need for fair and negotiated compensation plans that serve stockholders' best interests. Tesla's proxy statement does not offer substantive evidence of how the voided 2018 award harms stockholder democracy or how its ratification will cure prior

[01:11:23] deficiencies and lead to a different outcome. Likewise, the opposition to this proposal fails to show any evidence of an existing performance-based component integrated into the executive pay structure that respects established human rights due diligence processes

[01:11:39] and principles. Instead, it cites its human rights policy that is wholly unrelated to executive compensation and doubles down on the argument that the currently contested executive pay structure is the only means of motivation to achieve our company's mission. This commitment to the

[01:11:57] status quo essentially dismisses the ongoing controversies that Tesla must face and overcome. Including softening sales, advancing competition, split focus and leadership, a 30% drop in stock price, reduced market cap, mass layoffs, human rights violations, and ongoing legal challenges.

[01:12:17] Tesla's executives absolutely should be duly compensated for innovative and successful business. However, stockholder democracy allows us to oppose demands like 25% control of the company and the largest pay package in corporate American history via further share issuance. We also have

[01:12:35] the right to vote for our leadership's compensation to be commensurate with financial and sustainability performance. This does not mean we do not respect our leadership's time, energy and contributions. Quite the contrary as it is our duty as stockholders to ensure long-term

[01:12:51] viability and success for our company. Thank you, Ms. Ricketts. The board's response is set forth in the proxy. So I might be wrong on this, but this seems like a proposal that says one thing but means another because she starts off by talking about

[01:13:13] sustainability and diversity in the C-suite. At least this is how I took it. And then at the very end, she talks about a CEO that's splitting their time that's demanding 25% of the company and Elon's big pay package. And the 25% of the company part of it,

[01:13:36] I don't know if I talked about this too terribly much, but Elon was saying that if he does not get 25% of the company, he's going to take the AI component and robotics component away from Tesla, which I don't know how you do that in a publicly traded company,

[01:13:52] but that was his threat. And I know a lot of shareholders were not happy with that. Now, we've talked about a lot of this stuff already, so I'm not going to rehash it because we're an hour

[01:14:04] and 14 minutes into this. So let's go ahead and get to our rebuttal. The board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders. The proposal is unnecessarily duplicative and redundant to Tesla's existing

[01:14:21] disclosures and commitments to sustainability. Tesla's mission is to accelerate the world's transition to sustainable energy, and our senior executive compensation plans serve to motivate achievement of this mission. We believe that true sustainability is not achieved through simply an image of action, producing reports or tying confused

[01:14:42] metrics to compensation plans. Rather, it is done through actions which have created visible, substantive changes. Every vehicle we sell, battery we install, and solar panel we add moves the needle in the direction of sustainable future. This is a long-term mission, and our

[01:15:00] compensation programs reflect this in that they consist primarily of salary or wages and equity awards. Moreover, these programs increasingly emphasize for our executive officers the grant of stock option awards, which have zero initial value and the increase in value of which is

[01:15:17] directly tied to the creation of sustainable stockholder value. The report the proposal seeks to impose on Tesla would not further the sustainability mission that we have set forth, rather it would likely impede our mission by diverting resources. Additionally, Tesla already

[01:15:34] discloses the information the stockholder proponent seeks. For example, the stockholder proponent requests that we apply the principles of the United Nations guiding principles on business and human rights. In our publicly available global human rights policy, we cite to

[01:15:50] these principles multiple times, including we utilize the United Nations guiding principles on business and human rights. Further on, we disclose in fulfilling our responsibility to respect human rights, we are committed to implementing the United Nations guiding

[01:16:07] principles on business and human rights. We conduct human rights due diligence to identify risks and work to mitigate them. And as recommended by the United Nations guiding principles on business and human rights, we commit to transparent reporting about our efforts

[01:16:26] and progress. We do not believe any benefit could be derived for the company or its stockholders to produce yet another report with the same statements. Tesla's annual impact report also provides additional information on how human rights values are respected in our operations.

[01:16:44] Protecting human rights is core to Tesla's procurement strategy, and we have established and implemented a supply chain due diligence management system aligned with the OECD due diligence guidance for responsible mineral supply chains from conflict affected in high-risk countries.

[01:17:01] We are one of the few downstream companies that publicly report through our impact report on how we follow each of the five steps set out in the guidance, including how we identify, including through audits and mitigate risks.

[01:17:15] I don't really have much to add on that. I was trying to think as we were going through these stockholder proposals and rebuttals and back and forth. What would be a fair way

[01:17:28] to pay CEOs? A lot does ride on their shoulders, but they're really handsomely rewarded. In a lot of cases, even when they mismanage the company, they're still pretty handsomely rewarded. I don't have a great answer, but I think executive C-suite type of

[01:17:56] pay should probably have something to do or something tied to employee pay. Like I'll give you a generic example. There are times when employees are told that there's no money for raises or raises will be very low this year, only to find out

[01:18:18] that the CEO or director or whoever the boss is got a nice big raise. In those instances, if there's no money for the little worker, the little guy or gral, then there's no money for

[01:18:34] the CEO. I think that C-suite compensation should be somewhat on par and actually held to a higher standard than what the employee compensation is. Obviously it would be at a much higher number,

[01:18:51] but if the average employee at your company got a 3% raise, then you can't get a higher than a 3% raise in your pay. Honestly, I don't have a good answer for this. If you have one, just email me bodi.bodeieat918digital.com. This is our final proposal.

[01:19:15] Let's move on to the seventh stockholder proposal, which is an advisory vote regarding committing to a moratorium on sourcing minerals from deep-sea mining. Our board is recommended against, for the reasons set forth in the proxy. This proposal

[01:19:28] is proposed by Asus So, whose representative Elizabeth Levy has also recorded a pre-recorded message. Good afternoon, Chairman, members of the board. My name is Elizabeth Levy, representing Asus So, speaking on proposal number 12. We know more about the surface

[01:19:49] of Mars than we do about the bottom of the ocean. Even so, a new industry is moving forward to exploit the deep sea. We believe this industry poses risks to Tesla now and into the future.

[01:20:05] Deep-sea mining is the process of dredging the ocean floor to extract battery-related minerals. It will indiscriminately destroy habitats and obliterate life in its path. Sea bed mining could release carbon stores and toxic sediment plumes, poisoning marine food chains

[01:20:24] and disrupting sea life breeding and migration. The deep sea is complex and abundant with life. Its ecosystems are slow-growing and fragile, with little to no ability to recover from outside disturbance. Plans are moving forward to launch the process for commercial-scale deep-sea mining

[01:20:43] with or without regulation. Tesla's membership in the OECD and Irma mining protocols does not resolve this issue, as neither currently applies to mining in the deep sea. Over 800 marine science and policy experts, 25 countries, 72 indigenous groups, and 48 companies are calling for a ban, moratorium, or precautionary pause on deep-sea

[01:21:10] mining. This includes Tesla's competitors BMW, Renault, Rivian, Volkswagen, and Volvo. Even General Motors has stated it does not plan to use deep-sea mine minerals. Our company's public stance on deep-sea mining matters. Tesla is the face of the EV transition,

[01:21:30] and its ambiguous position on deep-sea mining could drive investment in this controversial industry. Conversely, a clear stance restricting Tesla's use of deep-sea minerals can drive innovation in battery mineral tech, recycling, and circularity. With these technologies,

[01:21:48] even the most ambitious future EVU scenarios could be met without harming the deep sea. Tesla's failure to take a stand on deep-sea mining, combined with the fact that a former Tesla board director is now serving as a board member and special advisor to the CEO of the metals

[01:22:06] company, the very company leading the charge on deep-sea mining, raises concerns. Such a relationship appears to imply that Tesla supports the metals company in its deep-sea mining activities. Committing to a moratorium will clarify expectations and reduce reputational harm

[01:22:25] to the company, assuring customers and investors that Tesla will indeed wait until science shows deep-sea mining will not cause significant or irreparable damage. Thank you. Thank you Ms. Levy. The board's response is set forth in the proxy.

[01:22:44] I mean that seems reasonable. We've done so much damage to different parts of the world because we just went in and haphazardly took minerals out of the earth without giving much

[01:22:57] thought to what the environment would, how it would be able to handle that. I think as a general role us as a people in the world were better than we were but we still have a long way to go so

[01:23:11] saying hey we're going to put a pause on this until we can really figure out what's the best way to do this so that we don't further harm these ecosystems that we're going

[01:23:22] into. There's not a really big reason right now to start mining in the ocean other than if you do it in a certain area it's probably not managed by any specific government or covered by any specific regulations. So I mean that's an advantage to companies not

[01:23:48] much of an advantage to the environment so I can see we're putting a pause on this and just kind of investigating it doesn't mean we don't do it it just means that we look into this and

[01:23:58] make sure we do it in as we don't want to do it in a way that's going to be harmful for you know years and years and years to come just because we want a couple electric cars out there.

[01:24:11] All right let's get to the rebuttal. The board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders. We are committed to protecting the environment and maximizing the positive impact of our supply chain for people and the

[01:24:28] planet as we accelerate the world's transition to sustainable energy. We source responsibly according to the Organization for Economic Cooperation and Development OECD. The OECD due diligence guidance for responsible mineral supply chains and responsible business conduct

[01:24:47] and the United Nations guiding principles on business and human rights. In doing this we set forth clear expectations for our suppliers including through our responsible sourcing policy and supplier code of conduct. At the same time our supplier relationships are inherently complex and decisions

[01:25:06] by company management regarding the entry into agreements with suppliers for the purchase of raw materials. The availability of raw materials particularly during periods of significant supply chain disruption or uncertainty the timing of such agreements and decisions under those agreements

[01:25:23] are fundamental to our ability to operate nimbly on a day-to-day basis while adhering to high responsible sourcing expectations. For example for the past five years we have reviewed scientific studies related to deep sea mining engaged with researchers and participated in multi-stakeholder

[01:25:41] forums to build an understanding of this issue internally to inform decision making. The company's management rather than the stockholder proponent is in the best place to make informed and specific decisions based on its specialized expertise and judgment while continuing to align with industry

[01:26:00] best practices and committing to responsible sourcing. In light of the foregoing reasons we believe the proposal would not serve the best interests of Tesla or our stockholders. I agree with most of that statement except for the statement where it says the board and

[01:26:18] management are in the best place rather than the stockholder proponent to make this judgment informed specific decisions based on specialized expertise and judgment simply because I don't know anything about this stockholder proponent they may be experts in their field when it comes to this

[01:26:40] type of thing so I just some of the wording in these rebuttals is arrogant and makes me angry and maybe it shouldn't maybe it's just business but yeah it feels really arrogant and it makes me

[01:26:57] mad. All right I think pausing and you know what how about this Tesla has battery day AI day robo taxi day why don't they take all of these things that stockholders are wanting to know about

[01:27:14] the take the subject of deep sea mining or sourcing materials and take the one where they were talking about collective bargaining and explain more about your thoughts on labor unions and although that one might be dangerous you know another one on transparency when it comes to

[01:27:33] you know treating employees fairly what you have all these days have a day for this kind of thing you don't mind spending money because honestly that gets people to invest money in your stock

[01:27:48] and your stock price goes up but you don't mind spending money on AI day which I think is needed spend a day on some of these other things that your shareholders are concerned about.

[01:28:00] I've got one more clip and we're going to hear the results of the votes and then we're going to go ahead and end the show. Based on the proxies that we have received and the

[01:28:10] votes submitted at this meeting I'd like to announce the results on a preliminary basis with respect to the seven stockholder proposals our stockholders have approved the recommendations of the Tesla board on all of them except for proposal six regarding director terms and proposal

[01:28:26] seven regarding simple majority voting. Now moving on to the five Tesla proposals first our stockholders have approved the election of our two class two directors James Murdock and Kimball Musk to serve for a term of three years and until their respective successors are

[01:28:49] duly elected and qualified. Second our stockholders have approved executive compensation on a non-binding advisory basis. Third our stockholders have approved the ratification of appointment of PricewaterhouseCoopers LOP as Tesla's independent registered public accounting firm for the 2024 fiscal year. Fourth our stockholders have approved the redomestication of Tesla from

[01:29:29] Delaware to Texas. Fifth and finally our stockholders have approved the ratification of the 100% performance based stock option award to Elon Musk that was approved by stockholders in 2018. The meeting is now closed. All right that is it for me because it's an hour and a

[01:30:34] half and this whole episode took over two days to produce so I'm going to leave this here. I honestly probably could have gone easily for three hours just on this subject so I'm trying to keep it

[01:30:46] real tight. I didn't do a really good job of that but you know I think this was important to go through as we talk about AI day and some of these other things that are coming up not AI

[01:30:59] day but Robo Taxi day some of these other things are coming up. It's good to know what Tesla's thinking and through their official statements what they're thinking about when we cover things like I said

[01:31:13] AI day or some of these other announcements that are coming up it's kind of good to be able to be like you know what I think they reference this or they reference something similar to this

[01:31:24] in their shareholder meeting so I hope you all enjoyed it. It actually took a lot of work and a lot of time and like I said it took two days to put together some of those were technical

[01:31:34] difficulties some of them were prior commitments that I already had that had to get done in the middle of this and some of it was work and family stuff but yeah I hope you all enjoyed it

[01:31:46] if you want to email me it's bodi.bode.ie at 918digital.com and then you can also find me at 918digital on X. I hope you all had a wonderful week on Tuesday we are going to get back into our

[01:32:01] regular scheduled news. All right everybody have a wonderful day.