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☐ | Preliminary Proxy Sta tem ent | |
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| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6 (e) (2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to Section 240.14a-11 (c) or Section 240.14a-12 |
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☒ | No fee required. | |||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and0-11 |
NOTICEOF 2023 ANNUAL MEETING
OF STOCKHOLDERS
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TO BE HELDON AUGUST 4, 2022 MAY 16, 2023
Dear Tesla Stockholders:
We are pleased to inform you that our 20222023 Annual Meeting of Stockholders (the “20222023 Annual Meeting”) will be held on Thursday, August 4, 2022,Tuesday, May 16, 2023, at 4:303:00 p.m. Central Time, both virtually via the Internet at www.meetnow.global/MJKP2QFTESLA2023 and in person for a limited number of stockholders at Tesla’s Gigafactory Texas located at 1 Tesla Road, Austin, TX 78725. For your convenience, we will also webcast the 20222023 Annual Meeting live via the Internet at www.tesla.com/2022shareholdermeeting2023shareholdermeeting. The agenda of the 20222023 Annual Meeting will be the following items of business, which are more fully described in this proxy statement:
Agenda Item | Board Vote Recommendation | |||
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| A Tesla proposal to elect | “FOR EACH COMPANY NOMINEE” | ||
2. | A Tesla proposal | “FOR” | ||
3. | A Tesla proposal | “ | ||
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| A Tesla proposal to ratify the appointment of PricewaterhouseCoopers LLP as Tesla’s independent registered public accounting firm for the fiscal year ending December 31, | “FOR” | ||
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All stockholders as of the close of business on June 6, 2022March 20, 2023 are cordially invited to attend the 20222023 Annual Meeting virtually via the Internet at www.meetnow.global/MJKP2QFTESLA2023. We will also accommodate a limited number of stockholders in person at Gigafactory Texas.
We are providing our proxy materials to our stockholders over the Internet. This reduces our environmental impact and our costs while ensuring our stockholders have timely access to this important information. Accordingly, stockholders of record at the close of business on June 6, 2022March 20, 2023 will receive a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) with details on accessing these materials. Beneficial owners of Tesla common stock at the close of business on June 6, 2022March 20, 2023 will receive separate notices on behalf of their brokers, banks or other intermediaries through which they hold shares.
Your vote is very important. Whether or not you plan to attend the 2022 Annual Meeting, we encourage you to read the proxy statement and vote as soon as possible. For specific instructions on how to vote your shares, please refer to the section entitled “Questions and Answers About the 2022 Annual Meeting and Procedural Matters” and the instructions on the Notice of Internet Availability or the notice you receive from your broker, bank or other intermediary.
Your vote is very important. Whether or not you plan to attend the 2023 Annual Meeting, we encourage you to read the proxy statement and vote as soon as possible. For specific instructions on how to vote your shares, please refer to the section entitled “Questions and Answers About the 2023 Annual Meeting and Procedural Matters” and the instructions on the Notice of Internet Availability or the notice you receive from your broker, bank or other intermediary. |
Thank you for your ongoing support of Tesla.
Elon Musk
Robyn Denholm
PROXY STATEMENT
FOR 2023 ANNUAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
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PROXY STATEMENT
FOR 2022 ANNUAL MEETING OF STOCKHOLDERS
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Tesla, Inc. 2023 Proxy Statement 1 |
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Delinquent Section 16(a) Reports |
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Ownership of Securities |
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ii
TESLA, INC.
1 Tesla Road
Austin, TX 78725
PROXY STATEMENTPROXY STATEMENT
FOR 2022 ANNUAL MEETING FOR 2023 ANNUAL MEETINGOF STOCKHOLDERS STOCKHOLDERS
IMPORTANT NOTICE REGARDING IMPORTANT NOTICE REGARDINGTHE AVAILABILITY AVAILABILITYOF PROXY MATERIALS PROXY MATERIALSFORTHE STOCKHOLDER MEETING STOCKHOLDER MEETINGTOBE HELD HELDON AUGUST 4, 2022 MAY 16, 2023
The proxy statement and annual report are available at www.envisionreports.com/TSLA.
In accordance with U.S. Securities and Exchange Commission (the “SEC”) rules, we are providing access to our proxy materials over the Internet to our stockholders rather than in paper form, which reduces the environmental impact of our annual meeting and our costs.
Accordingly, if you are a stockholder of record, a one-page Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) has been mailed to you on or about , 2022.April 6, 2023. Stockholders of record may access the proxy materials on the website listed above or request a printed set of the proxy materials be sent to them by following the instructions in the Notice of Internet Availability. The Notice of Internet Availability also explains how you may request that we send future proxy materials to you by e-mail or in printed form by mail. If you choose the e-mail option, you will receive an e-mail next year with links to those materials and to the proxy voting site. We encourage you to choose this e-mail option, which will allow us to provide you with the information you need in a timelier manner, will save us the cost of printing and mailing documents to you and will conserve natural resources. Your election to receive proxy materials by e-mail or in printed form by mail will remain in effect until you terminate it.
If you are a beneficial owner, you will not receive a Notice of Internet Availability directly from us, but your broker, bank or other intermediary will forward you a notice with instructions on accessing our proxy materials and directing that organization how to vote your shares, as well as other options that may be available to you for receiving our proxy materials.
Please refer to the question entitled “What is the difference between holding shares as a stockholder of record or as a beneficial owner?” below for important details regarding different forms of stock ownership.
Tesla, Inc. 2023 Proxy Statement 1 |
QUESTIONS AND ANSWERS ABOUT THE 20222023 ANNUAL MEETING AND PROCEDURAL
MATTERS
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Q: | Why am I receiving these proxy materials? |
A: | The Board of Directors (the “Board”) of Tesla, Inc. (the “Company,” “Tesla,” “we,” “us” or “our”) has made available on the Internet or is providing to you in printed form these proxy materials. We do this in order to solicit voting proxies for use at Tesla’s |
(* Please see also the notice at the top of this section.)
Q: | Can I attend the |
A: | Tesla expects to accommodate a limited number of stockholders in person at the |
In addition, you may attend the 2023 Annual Meeting virtually via the Internet at www.meetnow.global/TESLA2023. The meeting will begin promptly at 3:00 p.m. Central Time. If you choose to attend the 2023 Annual Meeting virtually via the Internet, we encourage you to access the meeting prior to the start time leaving ample time for log-in.
Q: |
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(* Please see also the notice at the top of this section.)
| Where is the |
A: | The |
(* Please see also the notice at the top of this section.)
Q: | Will I be able to view the |
A: | Yes. You may attend the |
(* Please see also the notice at the top of this section.)
Q: | Who is entitled to vote at the |
A: | You may vote your shares of Tesla common stock if you owned your shares at the close of business on the Record Date. You may cast one vote for each share of common stock held by you as of the Record Date on all matters presented. See the questions entitled “How can I vote my shares in person at the |
As of the Record Date, holders of common stock were eligible to cast an aggregate of 1,036,390,5693,169,269,409 votes at the 20222023 Annual Meeting.
2 Tesla, Inc. 2023 Proxy Statement |
Q: | What is the difference between holding shares as a stockholder of record or as a beneficial owner? |
A: | You are the “stockholder of record” of any shares that are registered directly in your name with Tesla’s transfer agent, Computershare Trust Company, N.A. A minority of our stockholders are stockholders of record. We have sent the Notice of Internet Availability directly to you if you are a stockholder of record. As a stockholder of record, you may grant your voting proxy directly to Tesla or to a third party or vote in person at the |
You are the “beneficial owner” of any shares (which are considered to be held in “street name”) that are held on your behalf by a brokerage account or by a bank or another intermediary that is the stockholder of record for those shares. The vast majority of our stockholders are beneficial owners. If you are a beneficial owner, you did not receive a Notice of Internet Availability directly from Tesla, but your broker, bank or other intermediary forwarded you a notice together with voting instructions for directing that organization how to vote your shares. You may also attend the 20222023 Annual Meeting in person (if you are eligible per our random drawing to attend in person), but because a beneficial owner is not a stockholder of record, you may not vote in person at the 20222023 Annual Meeting unless you obtain a “legal proxy” from the organization that holds your shares, giving you the right to vote the shares at the 20222023 Annual Meeting.
(* Please see also the notice at the top of this section.)
Q: | How can I vote my shares in person at the |
A: | You may vote shares for which you are the stockholder of record in person at the |
(* Please see also the notice at the top of this section.)
Q: | How can I vote my shares virtually at the |
A: | In order to join, submit questions and vote virtually via the Internet at the |
If you are a “stockholder of record” with shares registered directly in your name with our transfer agent, Computershare Trust Company (a minority of Tesla stockholders), you can find the control number on the Notice of Internet Availability or paper proxy card that was sent to you.
If you are a beneficial owner of shares held in street name, you may:
›› | If you are a “stockholder of record” with shares registered directly in your name with our transfer agent, Computershare Trust Company (a minority of Tesla stockholders), you can find the control number on the Notice of Internet Availability or paper proxy card that was sent to you. |
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›› | Register in advance to obtain a control number. Please ask your broker, bank or |
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| Use the control number received with your voting instruction form. Please note, however, that this option is intended to be provided as a convenience to beneficial owners only, and there is no guarantee this option will be available for every type of beneficial owner voting control number. Please go to www.meetnow.global/ |
Tesla, Inc. 2023 Proxy Statement 3 |
Even if you plan to attend the 20222023 Annual Meeting virtually via the Internet, we recommend that you also direct the voting of your shares as described below in the question entitled “How can I vote my shares without attending the 20222023 Annual Meeting?” so that your vote will be counted even if you later decide not to attend the 20222023 Annual Meeting.
(* Please see also the notice at the top of this section.)
Q: | How can I vote my shares without attending the |
A: | Whether you hold shares as a stockholder of record or a beneficial owner, you may direct how your shares are voted without attending the |
By Internet—Stockholders of record with Internet access may submit proxies by following the voting instructions on the Notice of Internet Availability until 1:00 a.m., Central timeTime on August 4, 2022.May 16, 2023. If you are a beneficial owner of shares held in street name, please check the voting instructions in the notice provided by your broker, bank or other intermediary for Internet voting availability.
By telephone—Stockholders of record who live in the United States (or its territories) or Canada may request a paper proxy card from Tesla by following the procedures in the Notice of Internet Availability, and submit proxies by following the applicable “Phone” instructions on the proxy card. If you are a beneficial owner of shares held in street name, please check the voting instructions in the notice provided by your broker, bank or other intermediary for telephone voting availability.
By mail—Stockholders of record may request a paper proxy card from Tesla by following the procedures in the Notice of Internet Availability. If you elect to vote by mail, please complete, sign and date the proxy card where indicated and return it in the prepaid envelope included with the proxy card. Proxy cards submitted by mail must be received by the time of the meeting
in order for your shares to be voted. If you are a beneficial owner of shares held in street name, you may vote by mail by completing, signing and dating the voting instructions in the notice provided by your broker, bank or other intermediary and mailing it in the accompanying pre-addressed envelope.
Q: | How many shares must be present or represented to conduct business at the |
A: | The stockholders of record of a majority of the shares entitled to vote at the |
Under the General Corporation Law of the State of Delaware, abstentions and broker “non-votes”“non-votes” are counted as present, and therefore are included for the purposes of determining whether a quorum is present at the 20222023 Annual Meeting. A broker “non-vote” occurs when an organization that is the stockholder of record that holds shares for a beneficial owner, and which is otherwise counted as present or represented by proxy, does not vote on a particular proposal because that organization does not have discretionary voting power under applicable regulations to vote on that item and has not received specific voting instructions from the beneficial owner.
Q: | What proposals will be voted on at the |
A: | The proposals scheduled to be voted on at the |
Tesla Proposals
A Tesla proposal to elect two Class III directors listed in this proxy statement to serve for a term of three years, subject to the approval of Proposal Two, or until their respective successors are duly elected and qualified (Proposal One);
›› | A Tesla proposal to elect three Class I directors listed in this proxy statement to serve for a term of three years, or until their respective successors are duly elected and qualified (Proposal One); |
A Tesla proposal for adoption of amendments to certificate of incorporation to reduce director terms to two years (Proposal Two);
›› | A Tesla proposal to approve executive compensation on a non-binding advisory basis (Proposal Two); |
A Tesla proposal for adoption of amendments to certificate of incorporation and bylaws to eliminate applicable supermajority voting requirements (Proposal Three);
›› | A Tesla proposal to approve the frequency of future votes on executive compensation on a non-binding advisory basis (Proposal Three); |
A Tesla proposal for adoption of amendments to certification of incorporation to increase the number of authorized shares of common stock by 4,000,000,000 shares (Proposal Four);
›› | A Tesla proposal to ratify the appointment of PricewaterhouseCoopers LLP as Tesla’s independent registered public accounting firm for the fiscal year ending December 31, 2023 (Proposal Four); and |
A Tesla proposal to ratify the appointment of PricewaterhouseCoopers LLP as Tesla’s independent registered public accounting firm for the fiscal year ending December 31, 2022 (Proposal Five);Stockholder Proposals
›› | A stockholder proposal regarding reporting on key-person risk, if properly presented (Proposal Five). |
4 Tesla, Inc. 2023 Proxy Statement |
Stockholder Proposals
A stockholder proposal regarding proxy access, if properly presented (Proposal Six);
A stockholder proposal regarding annual reporting on anti-harassment and discrimination efforts, if properly presented (Proposal Seven);
A stockholder proposal regarding annual reporting on board diversity, if properly presented (Proposal Eight);
A stockholder proposal regarding reporting on employee arbitration, if properly presented (Proposal Nine);
A stockholder proposal reporting on lobbying, if properly presented (Proposal Ten);
A stockholder proposal regarding adoption of a freedom of association and collective bargaining policy, if properly presented (Proposal Eleven);
A stockholder proposal regarding additional reporting on child labor, if properly presented (Proposal Twelve); and
A stockholder proposal regarding additional reporting on water risk, if properly presented (Proposal Thirteen).
Q: |
| What is the voting requirement to approve each of the proposals? |
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Proposal | Vote Required |
| Broker Discretionary Voting Allowed | ||
Proposal One—Tesla proposal to elect | Majority of the shares present in person or represented by proxy and entitled to vote on the election of directors | No | |||
Proposal Two— |
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Proposal | The frequency (every one, two or three years) receiving the most votes will be considered the frequency recommended by stockholders | No | |||
Proposal Four—Tesla proposal to ratify the appointment of independent registered public accounting firm | Majority of the shares present in person or represented by proxy and entitled to vote on the subject matter |
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Proposal | Majority of the shares present in person or represented by proxy and entitled to vote on the subject matter | No |
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A: | All shares entitled to vote and that are voted in person at the |
With respect to the election of directors, Tesla’s bylaws provide that in an uncontested election, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter is required to elect a director. Abstentions with respect to any director nominee (Proposal One) or any of Proposals Two, Three, Four Five, Six, Seven, Eight, Nine, Ten, Eleven, Twelve and ThirteenFive will have the same effect as a vote against such nominee or Proposal. Consequently, each director nominee will be elected, and each of Proposals Five, Six, Seven, Eight, Nine, Ten, Eleven, TwelveTwo, Four and ThirteenFive will be approved or ratified, as applicable, only if the number of shares voted “FOR” such nominee or Proposal exceeds the total number of shares voted “AGAINST” or to “ABSTAIN” with respect to such nominee or Proposal.
With respectYou may vote to eachrecommend, by non-binding vote, the frequency of Proposals Two and Three,future executive compensation votes (Proposal Three) for a vote every one, two or three years, or you may abstain from voting. The Board will consider the affirmative votefrequency option that receives the greatest number of at least 66 2/3%votes among the three frequency options to be the recommendation of the total outstanding shares entitled to vote, regardless of whether such shares are present in person or represented by proxy at the 2022 Annual Meeting, is required to approve such Proposal, and with respect to Proposal Four, the affirmative vote of at least a majority of the total outstanding shares entitled to vote, regardless of whether such shares are present in person or represented by proxy at the 2022 Annual Meeting, is required to approve such Proposal. Your failure to vote or your abstention with respect to any of Proposals Two, Three and Fourstockholders. Abstentions will have the sameno effect as a vote against such Proposal.on Proposal Three.
Q: | What is the effect of not casting a vote or if I submit a proxy but do not specify how my shares are to be voted? |
A: | If you are a stockholder of record and you do not vote by proxy card, by telephone or via the Internet before the |
Tesla, Inc. 2023 Proxy Statement 5 |
If you are a beneficial owner and you do not provide the organization that is the stockholder of record for your shares with voting instructions, the organization will determine if it has the discretionary authority to vote on the particular matter. Under applicable regulations, brokers and other intermediaries have the discretion to vote on routine matters, such as ProposalsProposal Four, and Five, but do not have discretion to vote on non-routine matters such as Proposals One, Two, Three Six, Seven, Eight, Nine, Ten, Eleven, Twelve or Thirteen.and Five. Therefore, if you do not provide voting instructions to that organization, it may vote your shares only on ProposalsProposal Four and Five and any other routine matters properly presented for a vote at the 20222023 Annual Meeting.
Q: | What is the effect of a broker |
A: | An organization that holds shares of Tesla’s common stock for a beneficial owner will have the discretion to vote on routine proposals if it has not received voting instructions from the beneficial owner at least ten days prior to the |
Q: | How does the Board recommend that I vote? |
A: | The Board recommends that you vote your shares: |
“FOR” the two nominees for election as Class III
(1) | Mr. |
(2) | Mr. Straubel has been nominated by the Board for election as a Class I director at the 2023 annual meeting of stockholders. |
Key Skills
The following chart sets forth certain key skills (based on prior and current roles) of our directors and director nominees.
E. Musk | Denholm | Ehrenpreis | Gebbia | Mizuno | Murdoch | K. Musk | Straubel | Wilson-Thompson | |||||||||||||||||||||||||||||||||||||
Executive Leadership | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||||||||||||||||
Financial Expertise / Investment | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||||||||||||||||||
Technology | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||||||||||||||||
Cybersecurity | ∎ | ∎ | ∎ | ||||||||||||||||||||||||||||||||||||||||||
Risk and Compliance | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||||||||||||||||||||
Growth / Transformation | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||||||||||||||||
Public Company Board Experience | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||||||||||||||||
Legal, Regulatory and Public Policy | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||||||||||||||||||||
Environmental / Social / Governance | |||||||||||||||||||||||||||||||||||||||||||||
Environmental | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||||||||||||||||||
Social | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||||||||||||||||||
Governance | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||||||||||||||||||
Global Operations | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | |||||||||||||||||||||||||||||||||||||
Manufacturing / Supply Chain | ∎ | ∎ | ∎ | ∎ | ∎ | ||||||||||||||||||||||||||||||||||||||||
Strategic Planning | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ |
Tesla, Inc. 2023 Proxy Statement 13 |
Director Bios
Elon Musk | ||||
Age: | 51 | |||
Director Since: | 2004 | |||
Career Highlights | Elon Musk has served as our Chief Executive Officer since October 2008. Mr. Musk has also served as Chief Executive Officer, Chief Technology Officer and Chairman of Space Exploration Technologies Corporation, a company which develops and launches advanced rockets for satellite, and eventually human, transportation (“SpaceX”), since May 2002, served as Chairman of the Board of SolarCity Corporation, a solar installation company (“SolarCity”), from July 2006 until its acquisition by us in November 2016 and served as Chief Executive Officer of Twitter, Inc., a social media company (“Twitter”), since October 2022. Mr. Musk is also a founder of The Boring Company, an infrastructure company, and Neuralink Corporation, a company focused on developing brain-machine interfaces. Prior to SpaceX, Mr. Musk co-founded PayPal, an electronic payment system, which was acquired by eBay in October 2002, and Zip2 Corporation, a provider of Internet enterprise software and services, which was acquired by Compaq in March 1999. Mr. Musk also served on the board of directors of Endeavor Group Holdings, Inc. from April 2021 to June 2022. Mr. Musk holds a B.A. in physics from the University of Pennsylvania and a B.S. in business from the Wharton School of the University of Pennsylvania. | |||
Impact | As our Chief Executive Officer, one of our founders and our largest stockholder, Mr. Musk brings historical knowledge, operational and technical expertise and continuity to the Board. Mr. Musk guided Tesla from an early-stage startup, through its IPO in 2010, to transformative growth into one of the most valuable companies in the world. Mr. Musk’s leadership and unique vision has played a key role in our mission to accelerate the world’s transition to sustainable energy. |
14 Tesla, Inc. 2023 Proxy Statement |
Robyn Denholm | ||||
Age: | 59 | |||
Director Since: | 2014 | |||
Committee Membership | • Audit (Chair) • Compensation • Nominating and Corporate Governance • Disclosure Controls (Chair) | |||
Career Highlights | Ms. Denholm has been Chair of the Board since November 2018. Since January 2021, Ms. Denholm has been an operating partner of Blackbird Ventures, a venture capital firm. She is also the Inaugural Chair of the Technology Council of Australia. From January 2017 through June 2019, Ms. Denholm was with Telstra Corporation Limited, a telecommunications company (“Telstra”), where she served as Chief Financial Officer and Head of Strategy from October 2018 through June 2019, and Chief Operations Officer from January 2017 to October 2018. Prior to Telstra, from August 2007 to July 2016, Ms. Denholm was with Juniper Networks, Inc., a manufacturer of networking equipment, serving in executive roles including Executive Vice President, Chief Financial Officer and Chief Operations Officer. Prior to joining Juniper Networks, Ms. Denholm served in various executive roles at Sun Microsystems, Inc. from January 1996 to August 2007. Ms. Denholm also served at Toyota Motor Corporation Australia for seven years and at Arthur Andersen & Company for five years in various finance assignments. Ms. Denholm previously served as a director of ABB Ltd. from 2016 to 2017. Ms. Denholm is a Fellow of the Institute of Chartered Accountants of Australia/New Zealand, a member of the Australian Institute of Company Directors, and holds a Bachelor’s degree in Economics from the University of Sydney, and a Master’s degree in Commerce and a Doctor of Business Administration (honoris causa) from the University of New South Wales. | |||
Impact | Ms. Denholm brings nearly 30 years of executive leadership experience at both NYSE and Nasdaq listed companies, including significant risk management, financial and accounting expertise, as well as technology leadership experience. Ms. Denholm has extensive knowledge of both the automotive and technology industries, including serving as the Chief Financial Officer and Chief Operating Officer of two technology companies. |
Tesla, Inc. 2023 Proxy Statement 15 |
Ira Ehrenpreis | ||||
Age: | 54 | |||
Director Since: | 2007 | |||
Committee Membership | • Compensation (Chair) • Nominating and Corporate Governance (Chair) | |||
Career Highlights | Mr. Ehrenpreis has been a venture capitalist since 1996. He is a founder and managing member of DBL Partners, a leading impact investing venture capital firm formed in 2015. Previously, he led the Energy Innovation practice at Technology Partners. Mr. Ehrenpreis has served on the board and Executive Committee, including as Annual Meeting Chairman, of the National Venture Capital Association (NVCA). Mr. Ehrenpreis currently serves as the Chairman of the VCNetwork, the largest and most active California venture capital organization, and as the President of the Western Association of Venture Capitalists (WAVC), the oldest venture capital organization in California. Mr. Ehrenpreis is also deeply involved in the energy technology sector. He currently serves on the National Renewable Energy Laboratory (NREL) Advisory Council, the University of Texas at Austin Energy Institute Advisory Board, and the Stanford Precourt Institute for Energy Advisory Council, and has served on the advisory boards of many industry groups, including the American Council on Renewable Energy, the Cleantech Venture Network (Past Chairman of Advisory Board) and the Stanford Global Climate and Energy Project (GCEP). He was also Chairman of the Clean-Tech Investor Summit for nine years. Mr. Ehrenpreis served for years as the Chairman of the Silicon Valley Innovation & Entrepreneurship Forum (SVIEF) and on the Advisory Board of the Forum for Women Entrepreneurs (FWE). Mr. Ehrenpreis was awarded the 2018 NACD Directorship 100 for his influential leadership in the boardroom and corporate governance community. Mr. Ehrenpreis holds a B.A. from the University of California, Los Angeles and a J.D. and M.B.A. from Stanford University. | |||
Impact | Mr. Ehrenpreis is an acknowledged leader in the energy, technology, impact and venture capital industries, where he serves on several industry boards, and brings valuable insights in corporate governance, strategic growth and stockholder values. Mr. Ehrenpreis’ long tenure on Tesla’s Board also provides the Company with stability and experience as it navigates through different challenges. |
16 Tesla, Inc. 2023 Proxy Statement |
Joe Gebbia | ||||
Age: | 41 | |||
Director Since: | 2022 | |||
Career Highlights | Mr. Gebbia co-founded Airbnb, Inc. in 2008 and has served on Airbnb’s board of directors since 2009. In 2022, Mr. Gebbia launched Samara, which produces fully customized, factory-made homes designed to create rental income, house family, support work from home, or bundled together, to form new types of housing communities. Mr. Gebbia received dual degrees in Graphic Design and Industrial Design from the Rhode Island School of Design, where he currently serves on the institution’s Board of Trustees. Mr. Gebbia is the Chairman of Airbnb.org, and also serves on the Olympic Refuge Foundation and leadership councils for UNHCR, Tent.org and Malala Fund. Mr. Gebbia is a sought-after speaker on design and entrepreneurship, and has been named in BusinessWeek’s Top 20 Best Young Tech Entrepreneurs, Inc. Magazine’s Thirty-under-Thirty, Fortune’s Forty-under-Forty, and one of Fast Company’s Most Creative People. | |||
Impact | Mr. Gebbia has valuable experience derived from founding and leading a global public company. The Board benefits from his entrepreneurial background, as well as his experience in design, innovation, brand development and management of complex regulatory environments. |
Tesla, Inc. 2023 Proxy Statement 17 |
Hiromichi Mizuno | ||||
Age: | 57 | |||
Director Since: | 2020 | |||
Career Highlights | Since January 2021, Mr. Mizuno has served as the United Nations Special Envoy on Innovative Finance and Sustainable Investments. Mr. Mizuno has also served as the representative partner and Chief Executive Officer of Good Steward Partners, LLC, a consulting firm, since March 2021. From January 2015 to March 2020, Mr. Mizuno was Executive Managing Director and Chief Investment Officer of Japan’s Government Pension Investment Fund, the largest pension fund in the world. Previously, Mr. Mizuno was a partner at Coller Capital, a private equity firm, from 2003 to 2015. In addition to being a career-long finance and investment professional, Mr. Mizuno has served as a board member of numerous business, government and other organizations, currently including the Mission Committee of Danone S.A., a global food products company, and the World Economic Forum’s Global Future Council. Mr. Mizuno is also involved in academia and thought leadership, having been named to leadership or advisory roles at Harvard University, University of Cambridge, Northwestern University and the Milken Institute. Mr. Mizuno holds a B.A. in Law from Osaka City University and an M.B.A. from the Kellogg Graduate School of Management at Northwestern University. | |||
Impact | Mr. Mizuno has a deep understanding of international economics, financial markets and government policies, and further increases the international expertise and global mindset of the Board. Through his role at the United Nations, Mr. Mizuno is also a global leader in environmental sustainability initiatives. Mr. Mizuno will not stand for re-election when his current term expires at Tesla’s 2023 annual meeting of stockholders. |
18 Tesla, Inc. 2023 Proxy Statement |
Elon Musk is the Technoking of Tesla and has served as our Chief Executive Officer since October 2008 and as a member of the Board since April 2004. Mr. Musk has also served as Chief Executive Officer, Chief Technology Officer and Chairman of Space Exploration Technologies Corporation, an advanced rocket and spacecraft manufacturing and services company (“SpaceX”), since May 2002, and served as Chairman of the Board of SolarCity Corporation, a solar installation company (“SolarCity”), from July 2006 until its acquisition by us in November 2016. Mr. Musk is also a founder of The Boring Company, an infrastructure company, and of Neuralink Corp., a company focused on developing brain-machine interfaces. Prior to SpaceX, Mr. Musk co-founded PayPal, an electronic payment system, which was acquired by eBay in October 2002, and Zip2 Corporation, a provider of Internet enterprise software and services, which was acquired by Compaq in March 1999. Mr. Musk has also served on the board of directors of Endeavor Group Holdings, Inc. since April 2021. Mr. Musk holds a B.A. in physics from the University of Pennsylvania and a B.S. in business from the Wharton School of the University of Pennsylvania.
James Murdoch | ||||
Age: | 50 | |||
Director Since: | 2017 | |||
Committee Membership | • Audit • Nominating and Corporate Governance • Disclosure Controls | |||
Career Highlights | Mr. Murdoch has been the Chief Executive Officer of Lupa Systems, a private holding company that he founded, since March 2019. Previously, Mr. Murdoch held a number of leadership roles at Twenty-First Century Fox, Inc., a media company (“21CF”), over two decades, including its Chief Executive Officer from 2015 to March 2019, its Co-Chief Operating Officer from 2014 to 2015, its Deputy Chief Operating Officer and Chairman and Chief Executive Officer, International from 2011 to 2014 and its Chairman and Chief Executive, Europe and Asia from 2007 to 2011. Previously, he served as the Chief Executive Officer of Sky plc from 2003 to 2007, and as the Chairman and Chief Executive Officer of STAR Group Limited, a subsidiary of 21CF, from 2000 to 2003. Mr. Murdoch formerly served on the boards of News Corporation from 2013 to 2020, of 21CF from 2007 to 2019, and of Sky plc from 2003 to 2018. In addition, he has served on the boards of GlaxoSmithKline plc and of Sotheby’s. | |||
Impact | Mr. Murdoch brings to the Board his decades of executive and board experience across numerous companies. Tesla’s Board benefits from his extensive knowledge of international markets and strategies and experience with the adoption of new technologies. |
We believe that Mr. Musk possesses specific attributes that qualify him to serve as a member of the Board, including the perspective and experience he brings as our Chief Executive Officer, one of our founders and our largest stockholder, which brings historic knowledge, operational expertise and continuity to the Board.
Robyn Denholm has been a member of the Board since August 2014 and its Chair since November 2018. Since January 2021, Ms. Denholm has been an operating partner of Blackbird Ventures, a venture capital firm. From January 2017 through June 2019, Ms. Denholm was with Telstra Corporation Limited, a telecommunications company (“Telstra”), where she served as Chief Financial Officer and Head of Strategy from October 2018 through June 2019, and Chief Operations Officer from January 2017 to October 2018. Prior to Telstra, from August 2007 to July 2016, Ms. Denholm was with Juniper Networks, Inc., a manufacturer of networking equipment, serving in executive roles including Executive Vice President, Chief Financial Officer and Chief Operations Officer. Prior to joining Juniper Networks, Ms. Denholm served in various executive roles at Sun Microsystems, Inc. from January 1996 to August 2007. Ms. Denholm also served at Toyota Motor Corporation Australia for seven years and at Arthur Andersen & Company for five years in various finance assignments. Ms. Denholm previously served as a director of ABB Ltd. from 2016 to 2017. Ms. Denholm is a Fellow of the Institute of Chartered Accountants of Australia/New Zealand, a member of the Australian Institute of Company Directors, and holds a Bachelor’s degree in Economics from the University of Sydney, and a Master’s degree in Commerce and a Doctor of Business Administration (honoris causa) from the University of New South Wales.
We believe that Ms. Denholm possesses specific attributes that qualify her to serve as a member of the Board and as its Chair as well as the chair of each of our Audit Committee and Disclosure Controls Committee, such as her executive leadership experience and her financial and accounting expertise with international companies, including in the technology and automotive industries.
Ira Ehrenpreis has been a member of the Board since May 2007. Mr. Ehrenpreis has been a venture capitalist since 1996. He is founder and managing member of DBL Partners, a leading impact investing venture capital firm formed in 2015, and previously led the Energy Innovation practice at Technology Partners. In the venture capital industry, Mr. Ehrenpreis has served on the board, Executive Committee, and as Annual Meeting Chairman of the National Venture Capital Association (NVCA). Mr. Ehrenpreis currently serves as the President of the Western Association of Venture Capitalists (WAVC) and as the Chairman of the VCNetwork, the largest and most active California venture capital organization. In the cleantech sector, he has served on several industry boards, including the American Council on Renewable Energy and the Cleantech Venture Network (Past Chairman of Advisory Board), as the Chairman of the Clean-Tech Investor Summit for nine years, and on the Stanford Precourt Institute for Energy (PIE) Advisory Council. Mr. Ehrenpreis also serves as Chairman of the World Energy Innovation Forum. Mr. Ehrenpreis was awarded the 2018
Tesla, Inc. 2023 Proxy Statement 19 |
NACD Directorship 100 for his influential leadership in the boardroom and corporate governance community. Mr. Ehrenpreis holds a B.A. from the University of California, Los Angeles and a J.D. and M.B.A. from Stanford University.
We believe that Mr. Ehrenpreis possesses specific attributes that qualify him to serve as a member of the Board and to serve as chair of each of our Nominating and Corporate Governance Committee and our Compensation Committee, including his experience in the cleantech and venture capital industries.
Kimbal Musk | ||||
Age: | 50 | |||
Director Since: | 2004 | |||
Career Highlights | Mr. Musk is co-founder and Executive Chairman of The Kitchen Restaurant Group, a growing family of businesses with the goal of providing all Americans with access to real food that was founded in 2004. In 2010, Mr. Musk became the Executive Director of Big Green (formerly The Kitchen Community), a non-profit organization that creates learning gardens in schools across the United States. Mr. Musk also co-founded Square Roots, an urban farming company growing fresh, local greens in climate-controlled, AI equipped shipping containers, in 2016, and serves as its Chairman. In 2022, Mr. Musk founded Nova Sky Stories, with a mission to empower producers and artists to bring art to the skies with drone light shows, and serves as its Chief Executive Officer. Previously, Mr. Musk was a co-founder of Zip2 Corporation, an early inventor of online maps and door to door directions, which was acquired by Compaq and merged into Yahoo Maps in 1999. In 2006, Mr. Musk became CEO of OneRiot, a realtime search engine that was acquired by Walmart in 2011. Mr. Musk was a director of SpaceX since its founding in 2002 until January 2022, and was a director of Chipotle Mexican Grill, Inc. from 2013 to 2019. Mr. Musk holds a B. Comm. in business from Queen’s University and is a graduate of The French Culinary Institute in New York City. | |||
Impact | Mr. Musk has extensive senior leadership business experience in the technology, retail and consumer markets, and a robust understanding of mission-driven ventures. Mr. Musk also provides valuable expertise based on his experience on the Tesla Board and is able to apply his unique understanding of the business to the strategy and execution of the Company. |
Lawrence J. Ellison has been a member of the Board since December 2018. Mr. Ellison is the founder of Oracle Corporation, a software and technology company, has served as its Chief Technical Officer since September 2014 and previously served as its Chief Executive Officer from June 1977 to September 2014. Mr. Ellison has also served on Oracle’s board of directors since June 1977, including as its Chairman since September 2014 and previously from May 1995 to January 2004.
We believe that Mr. Ellison possesses specific attributes that qualify him to serve as a member of the Board, including his long-term leadership of one of the most successful technology companies in the world and experience with technology product development and strategy.
Mr. Ellison will not stand for re-election when his current term expires at Tesla’s 2022 annual meeting of stockholders.
Hiromichi Mizuno has been a member of the Board since April 2020. Since January 2021, Mr. Mizuno has served as the United Nations Special Envoy on Innovative Finance and Sustainable Investments. Mr. Mizuno has also served as the representative partner and Chief Executive Officer of Good Steward Partners, LLC, a consulting firm, since March 2021. From January 2015 to March 2020, Mr. Mizuno was Executive Managing Director and Chief Investment Officer of Japan’s Government Pension Investment Fund, the largest pension fund in the world. Previously, Mr. Mizuno was a partner at Coller Capital, a private equity firm, from 2003. In addition to being a career-long finance and investment professional, Mr. Mizuno has served as a board member of numerous business, government and other organizations, currently including the Mission Committee of Danone S.A., a global food products company, and the World Economic Forum’s Global Future Council. Mr. Mizuno is also involved in academia and thought leadership, having been named to leadership or advisory roles at Harvard University, University of Cambridge, Northwestern University and the Milken Institute. Mr. Mizuno holds a B.A. in Law from Osaka City University and an M.B.A. from the Kellogg Graduate School of Management at Northwestern University.
We believe that Mr. Mizuno possesses specific attributes that qualify him to serve as a member of the Board, including his deep understanding of international economics, financial markets and government policies.
James Murdoch has been a member of the Board since July 2017. Mr. Murdoch has been the Chief Executive Officer of Lupa Systems, a private investment company that he founded, since March 2019. Previously, Mr. Murdoch held a number of leadership roles at Twenty-First Century Fox, Inc., a media company (“21CF”), over two decades, including its Chief Executive Officer from 2015 to March 2019, its Co-Chief Operating Officer from 2014 to 2015, its Deputy Chief Operating Officer and Chairman and Chief Executive Officer, International from 2011 to 2014 and its Chairman and Chief Executive, Europe and Asia from 2007 to 2011. Previously, he served as the Chief Executive Officer of Sky plc from 2003 to 2007, and as the Chairman and Chief Executive Officer of STAR Group Limited, a subsidiary of 21CF, from 2000 to 2003. Mr. Murdoch also formerly served on the boards of News Corporation from 2013 to 2020, of 21CF from 2007 to 2019 and of Sky plc from 2003 to 2018.
We believe that Mr. Murdoch possesses specific attributes that qualify him to serve as a member of the Board, including his lengthy executive and board experience across numerous companies, extensive knowledge of international markets and strategies and experience with the adoption of new technologies.
Kimbal Musk has been a member of the Board since April 2004. Mr. Musk is co-founder and Executive Chairman of The Kitchen Restaurant Group, a growing family of businesses with the goal of providing all Americans with access to real food that was founded in 2004. In 2010, Mr. Musk became the Executive Director of Big Green (formerly The Kitchen Community), a non-profit organization that creates learning gardens in schools across the United States. Mr. Musk also co-founded Square Roots, an urban farming incubator program, in 2016, and serves as its Chairman. Previously, Mr. Musk was a co-founder of Zip2 Corporation, a provider of enterprise software and services, which was acquired by Compaq in March 1999. Mr. Musk was a director of SpaceX from 2002 until January 2022, and a director of Chipotle Mexican Grill, Inc. from 2013 to 2019. Mr. Musk holds a B. Comm. in Business from Queen’s University and is a graduate of The French Culinary Institute in New York City.
20 Tesla, Inc. 2023 Proxy Statement |
We believe that Mr. Musk possesses specific attributes that qualify him to serve as a member of the Board, including his business experience in retail and consumer markets, his experience on the Board and his experience with technology companies.
Kathleen Wilson-Thompson has been a member of the Board since December 2018. Ms. Wilson-Thompson served as Executive Vice President and Global Chief Human Resources Officer of Walgreens Boots Alliance, Inc., a global pharmacy and wellbeing company, from December 2014 until her retirement in January 2021, and previously served as Senior Vice President and Chief Human Resources Officer from January 2010 to December 2014. Prior to Walgreens, Ms. Wilson-Thompson held various legal and operational roles at The Kellogg Company, a food manufacturing company, from July 2005 to December 2009, including most recently as its Senior Vice President, Global Human Resources. Ms. Wilson-Thompson has served on the board of directors of Wolverine World Wide, Inc. since May 2021 and McKesson Corporation since January 2022. She previously served on the board of directors of Ashland Global Holdings Inc. from 2017 to 2020 and on the board of directors of Vulcan Materials Company from 2009 to 2018. Ms. Wilson-Thompson holds an A.B. in English Literature from the University of Michigan and a J.D. and L.L.M. (Corporate and Finance Law) from Wayne State University.
We believe that Ms. Wilson-Thompson possesses specific attributes that qualify her to serve as a member of the Board, including her executive and board experience with both consumer-focused and industrial companies, as well as her expertise in managing human resources and other operations at mature companies with large workforces.
JB Straubel | ||||
Age: | 47 | |||
Director Since: | Nominee | |||
Career Highlights | Mr. Straubel is the Founder and Chief Executive Officer of Redwood Materials Inc., a Nevada-based company working to drive down the costs and environmental footprint of lithium-ion batteries by offering large-scale sources of domestic anode and cathode materials produced from recycled batteries. Mr. Straubel also co-founded and served as the Chief Technology Officer of Tesla from May 2005 to July 2019. Mr. Straubel previously served on the board of SolarCity Corporation and as a member of its Nominating and Corporate Governance Committee from August 2006 until its acquisition by Tesla in November 2016. Mr. Straubel has served on the board of directors of QuantumScape since November 2020. Mr. Straubel holds a B.S. in Energy Systems Engineering and a M.S. in Engineering, with an emphasis on energy conversion, from Stanford University. | |||
Impact | As a co-founder and one of the key members of Tesla’s leadership team for over a decade, Mr. Straubel brings extensive operational experience and in-house knowledge of Tesla’s technology, research and development of business management. Mr. Straubel also provides valuable expertise in the areas of cleantech and batteries. Mr. Straubel has been nominated by the Board for election as a Class I director at the 2023 annual meeting of stockholders. |
Tesla, Inc. 2023 Proxy Statement 21 |
Kathleen Wilson-Thompson | ||||
Age: | 65 | |||
Director Since: | 2018 | |||
Committee Membership | • Compensation Committee • Nominating and Corporate Governance • Disclosure Controls | |||
Career Highlights | Ms. Wilson-Thompson served as Executive Vice President and Global Chief Human Resources Officer of Walgreens Boots Alliance, Inc., a global pharmacy and wellbeing company, from December 2014 until her retirement in January 2021, and previously served as Senior Vice President and Chief Human Resources Officer from January 2010 to December 2014. Prior to Walgreens, Ms. Wilson-Thompson held various legal and operational roles at The Kellogg Company, a food manufacturing company, from January 1991 to December 2009, including most recently as its Senior Vice President, Global Human Resources. Ms. Wilson-Thompson has served on the board of directors of Wolverine World Wide, Inc. since May 2021 and McKesson Corporation since January 2022. She previously served on the board of directors of Ashland Global Holdings Inc. from 2017-2020 and on the board of directors of Vulcan Materials Company from 2009-2018. | |||
Impact | Ms. Wilson-Thompson brings extensive executive and board experience at both consumer-focused and industrial companies. In addition, her expertise in managing human resources, employment law and other operations at mature companies with large workforces provides the Board with valuable insight and advice for workforce management and relations as Tesla continues to expand. |
Additional Information
On October 16, 2018, the U.S. District Court for the Southern District of New York entered a final judgment approving the terms of a settlement filed with the court on September 29, 2018, in connection with the actions taken by the SEC relating to Elon Musk’s August 7, 2018 Twitter post that he was considering taking Tesla private. On April 26, 2019, this settlement was amended to clarify certain of its terms, which was subsequently approved by the Court. Mr. Musk did not admit or deny any of the SEC’s allegations, and there is no restriction on Mr. Musk’s ability to serve as an officer or director on the Board (other than as its Chair for a specified time).
See “Corporate Governance” and “Executive Compensation—Compensation of Directors” below for additional information regarding the Board.
22 Tesla, Inc. 2023 Proxy Statement |
TESLA PROPOSAL TESLA PROPOSALFOR ADOPTION OF AMENDMENTS TO CERTIFICATE OF INCORPORATION TO REDUCE DIRECTOR TERMS TO TWO YEARS NON-BINDING ADVISORY VOTEON EXECUTIVE COMPENSATION
WePursuant to Schedule 14A of the Exchange Act, we are submitting toasking our stockholders ato vote to adoptapprove, on an advisory basis, the inclusioncompensation of certain provisionsour “named executive officers” as disclosed in accordance with the SEC’s rules in the “Executive Compensation” section of this proxy statement beginning on page 40 below. This proposal, commonly known as a proposed amendment“say-on-pay” proposal, gives our stockholders the opportunity to weigh in on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and restatement (the “Amended Certificate”)the philosophy, policies and practices described in this proxy statement. We currently have a policy providing for a triennial say-on-pay vote and, in Proposal Three (advisory vote on the frequency of future executive compensation advisory approvals), the Board recommends that stockholders approve an advisory resolution supporting continued triennial say-on-pay votes. Accordingly, we anticipate that the next advisory vote on the compensation of our current certificate of incorporationnamed executive officers would occur in 2026.
The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board. The say-on-pay vote will, however, provide information to reduce the number of classes intous regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Board is divided from threeCompensation Committee will be able to two, resulting in each director’s term being reduced from three years to two years (the “Director Term Amendment”).
consider when determining executive compensation for the remainder of the current fiscal year and beyond. The Board has approvedand the Director Term Amendment subject to its adoption by our stockholders. Accordingly, uponCompensation Committee value the approvalopinions of this Proposal by our stockholders and to the extent there is any significant vote against our named executive officer compensation as disclosed in this proxy statement, we will fileconsider our stockholders’ concerns and the Amended Certificate including the Director Term Amendment with the Secretary of State of the State of Delaware as soon as practicable following the 2022 Annual Meeting, at which time the Amended CertificateCompensation Committee will become effective. In addition, if our stockholders also approve Proposal Three relatingevaluate whether any actions are necessary to amendments of our governing documents to eliminate applicable supermajority voting requirements and Proposal Four relating to an amendment of our certification of incorporation to increase the number of authorized shares of common stock by 4,000,000,000 shares, the Amended Certificate we file will also include such applicable amendments. Finally, if our stockholders approve any or all of this Proposal, Proposal Three and Proposal Four, the Amended Certificate we file will also incorporate a prior certificate of amendment, effective February 1, 2017, to our certificate of incorporation to reflect the change of our corporate name from “Tesla Motors, Inc.” to “Tesla, Inc.,” which did not and does not require adoption by our stockholders. See “Proposal Three—Tesla Proposal for Adoption of Amendments to Certificate of Incorporation and Bylaws to Eliminate Applicable Supermajority Voting Requirements” and “Proposal Four —Tesla Proposal for Adoption of Amendments to Certificate of Incorporation to Increase the Number of Authorized Shares of Common Stock” below for more information.address those concerns.
Summary of the Proposed Amendment2022 Executive Compensation Program
The following is a summary of some of the proposed Director Term Amendment,key points of our 2022 executive compensation program:
Tesla continues to emphasize structuring compensation incentives to reward our named executive officers based on performance.
Equity awards weigh heavily in our named executive officers’ total compensation, including awards that vest upon the achievement of clear and measurable milestones. Since these awards increase in value as our stock price increases (and in the case of stock option awards, have no value unless our stock price increases following their grant), our named executive officers’ incentives are closely aligned with the long-term interests of our stockholders. In 2020, the last year any of our named executive officers received equity awards, such awards were all granted in the form of stock options. As a result, a significant portion of our named executive officers’ total compensation is entirely at risk, depending on long-term stock price performance.
Tesla has no cash bonus program for any of our named executive officers and generally does not provide any perquisites or tax reimbursements to our named executive officers that are not available to other employees. No named executive officer currently has any severance or change of control arrangement.
Each named executive officer is employed at will and is qualifiedexpected to demonstrate exceptional personal performance in its entirety by referenceorder to the full textcontinue serving as a member of the Amended Certificateexecutive team.
• | Elon Musk, our Chief Executive Officer, historically earned a base salary that reflected the applicable minimum wage requirements under California law, and he was subject to income taxes based on such base salary. However, he has never accepted his salary. Commencing in May 2019 at Mr. Musk’s request, we eliminated altogether the earning and accrual of this base salary. Consequently, 100% of Mr. Musk’s future compensation was at-risk in the form of the remaining unvested stock options under the 10-year performance-based stock option award granted to Elon Musk in January 2018 (the “2018 CEO Performance Award”). |
In particular, the 2018 CEO Performance Award consisted of 12 equal tranches, each which vested upon the achievement of a market capitalization milestone matched to one of eight revenue-based operational milestones or eight Adjusted EBITDA-based operational milestones, all of which were viewed as set forthdifficult hurdles at the time of grant. While our stockholders benefit from each incremental increase in Appendix A, specifically Section 5.2 thereof (with additions shown as underlinedTesla’s performance and deletions shown as struck through).stock price, aligning
Tesla, Inc. 2023 Proxy Statement 23 |
their interests with Mr. Musk’s incentives, the tranches under the 2018 CEO Performance Award vested only upon the full achievement of specific milestones, making it even more challenging for Mr. Musk to realize value from such increases. As of the date of this proxy statement, all of the tranches have vested and become exercisable, subject to Mr. Musk’s payment of the exercise price of $23.34 per share, as adjusted to give effect to the three-for-one stock split effected in the form of a stock dividend in August 2022 (the “2022 Stock Split”) and the five-for-one stock split effected in the form of a stock dividend in August 2020 (the “2020 Stock Split”), and the minimum five-year holding period generally applicable to any shares he acquires upon exercise. See “Executive Compensation—Compensation Discussion and Analysis—Chief Executive Officer Compensation” below for more details. |
For detailed information about Tesla’s executive compensation program, see the “Executive Compensation” section beginning on page 40 below.
The Director Term AmendmentTesla believes that the information provided above and within the “Executive Compensation” section of this proxy statement demonstrates that Tesla’s executive compensation program was designed appropriately and is proposedworking to be included inensure management’s interests are aligned with our stockholders’ interests to support long-term value creation.
Proposed Resolution
Accordingly, we ask our stockholders to vote “FOR” the Amended Certificate provides for the reduction of the classes of the Board from three to two, comprised of Class I and Class II, with: (i) directors divided between them as nearly equal in size as is practicable by the Board (including following future increases or decreases in the number of directorships); (ii) the terms of the initial Class I directors expiringresolution at the 2023 annual meeting ofAnnual Meeting:
“RESOLVED, that the Company’s stockholders and thereafter at each second annual meeting of stockholders next succeeding the most recent election at which directors of such class were elected; and (iii) the terms of the initial Class II directors expiring at the 2024 annual meeting of stockholders and thereafter at each second annual meeting of stockholders next succeeding the most recent election at which directors of such class were elected. Consequently, if the Director Term Amendment is approved, each director’s term will be reduced from three years to two years, subject to any increase to a director’s term resulting from a re-assignment of Board classes in order to maintain classes as nearly equal in size as is practicable.
The Board has approved the following assignments of our directors to the two classes of the Board, contingent upon the adoption of the Director Term Amendment by our stockholders:
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Reasons for the Proposed Amendment
Please see “Proposal Three—Tesla Proposal for Approval and Adoption of Amendments to Certificate of Incorporation and Bylaws to Eliminate Applicable Supermajority Voting Requirements—Reasons for the Proposed Amendments” below for the Board’s reasons for recommending that our stockholders approve, both this Proposal and Proposal Three.
The Board recommends a vote FOR the Tesla proposal for the approval of an amendment to our certificate of incorporation to reduce director terms to two years.
TESLA PROPOSAL FOR ADOPTION OF AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BYLAWS TO ELIMINATE APPLICABLE SUPERMAJORITY VOTING REQUIREMENTS
We are submitting to our stockholders a vote to adopt at the 2022 Annual Meeting each of the following:
The inclusion of certain provisions in the proposed Amended Certificate to eliminate the current requirements that certain categories of changes to our certificate of incorporation be approved by the affirmative vote of at least 66 2/3% of the total voting power of all outstanding shares of Tesla common stock (the “Supermajority Amendment”); and
An amendment and restatement (the “Amended Bylaws”) of our current bylaws to eliminate the current requirements therein that certain categories of changes to our bylaws be approved by the affirmative vote of at least 66 2/3% of the total voting power of all outstanding shares of Tesla common stock.
The Board has approved the Supermajority Amendment subject to its adoption by our stockholders, and has approved the submission of the Amended Bylaws to our stockholders for their adoption.
If our stockholders approve this Proposal: (i) we will file the Amended Certificate including the Supermajority Amendment with the Secretary of State of the State of Delaware as soon as practicable following the 2022 Annual Meeting, at which time the Amended Certificate will become effective, and (ii) the Amended Bylaws will be adopted by our stockholders and become immediately effective. In addition, if our stockholders also approve Proposal Two relating to an amendment of our certificate of incorporation to reduce the terms of our directors from three years to two years and Proposal Four relating to an amendment of our certification of incorporation to increase the number of authorized shares of common stock by 4,000,000,000 shares, the Amended Certificate we file will also include such amendments. Finally, if our stockholders approve any or all of this Proposal, Proposal Two and Proposal Four, the Amended Certificate we file will also incorporate a prior certificate of amendment, effective February 1, 2017, to our certificate of incorporation to reflect the change of our corporate name from “Tesla Motors, Inc.” to “Tesla, Inc.,” which did not and does not require adoption by our stockholders. See “Proposal Two —Tesla Proposal for Adoption of Amendments to Certificate of Incorporation to Reduce Director Terms to Two Years” above and “Proposal Four —Tesla Proposal for Adoption of Amendments to Certificate of Incorporation to Increase the Number of Authorized Shares of Common Stock” for more information.
Summary of the Proposed Amendments
The following are summaries of the proposed Supermajority Amendment and Amended Bylaws. Each summary is qualified in its entirety by reference to the full text of the Amended Certificate as set forth in Appendix A, specifically Article IX thereof, and of the Amended Bylaws as set forth in Appendix B (in each case, with additions shown as underlined and deletions shown as struck through).
Supermajority Amendment
The Supermajority Amendment that is proposed to be included in the Amended Certificate provides for the deletion of the requirement that an affirmative vote of the holders of at least 66 2/3% of the voting power of all outstanding shares of capital stock of Tesla entitled to vote generally in the election of directors, voting together as a single class, be required to amend, alter or repeal, or adopt any provision in our certificate of incorporation inconsistent with the purpose and intent of the provisions currently therein relating to: (i) the general powers, number, elections, terms, removals, vacancies of, or newly created directorships for, members of the Board; (ii) the authority of the Board to adopt, amend or repeal our bylaws; (iii) actions by written consent of stockholders, special meetings of stockholders, and the required advance notice for director nominations and business to be brought by stockholders at meetings; and (iv) the amendment of our certificate of incorporation. Consequently, if the Supermajority Amendment is adopted, the Amended Certificate will not require that a proposed amendment, alteration, change or repeal of any provision in the Amended Certificate be subject to approval by a supermajority of our stockholders.
Amended Bylaws
The Amended Bylaws provide for the deletion of the requirement that an affirmative vote of the holders of at least 66 2/3% of the voting power of all outstanding voting securities of Tesla, voting together as a single class, be required for the stockholders of Tesla to alter, amend or repeal, or adopt any bylaw inconsistent with, the provisions currently therein relating to: (i) meetings of stockholders; (ii) the powers, number, resignations, vacancies and removals of members of the Board; (iii) indemnification; and (iv) the amendment of our bylaws. Consequently, if the Amended Bylaws are adopted by our stockholders, our stockholders will be permitted to adopt, amend or repeal the Amended Bylaws pursuant to a simple majority vote, or any other standard required by applicable laws.
Reasons for the Proposed Amendments
Tesla’s mission is to accelerate the world’s transition to sustainable energy. This mission continues to require a long-term focus that we believe will ultimately maximize value to our stockholders, and we face the risk of distractions posed by special interests that seek only short-term returns. At the same time, the Board continuously evaluates our corporate governance structure, practices and policies, and feedback from our robust stockholder engagement program through which we connect with top stockholders regularly and monitor their views on governance matters. As part of this evaluation, the Board considered recent feedback from our stockholders and reviewed the stockholder proposals we have historically received for our annual meetings of stockholders, including Proposal Six, and a stockholder proposal to vote on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the Annual Meeting of Stockholders pursuant to eliminate supermajority voting in 2020, whichthe compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the other related disclosure.”
THE BOARD RECOMMENDS A VOTE FOR THE TESLA PROPOSAL FOR A NON-BINDING ADVISORY
VOTE APPROVING EXECUTIVE COMPENSATION.
24 Tesla, Inc. 2023 Proxy Statement |
PROPOSAL THREE
TESLA PROPOSALFOR NON-BINDING ADVISORY VOTEONTHE FREQUENCYOFTHE FUTURE NON-BINDING VOTEON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables our stockholders approvedto indicate, at least once every six years, how frequently we should seek a non-binding vote on the 2020 annual meetingcompensation of stockholders.our named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules, such as Proposal Two beginning on page 23 of this proxy statement. By voting on this Proposal Three, stockholders may indicate whether they would prefer a non-binding vote on named executive officer compensation once every one, two or three years.
TheAfter careful consideration, our Board has determined that Tesla has established enough momentum and credibility for its mission, particularly through a very successful fiscal 2021, to set its coursenon-binding vote on executive compensation that occurs triennially is the most appropriate alternative for the foreseeable futureCompany, and more effectively defend itself from opportunistic corporate raiders. therefore our Board recommends that you vote for a three-year interval for the non-binding vote on executive compensation.
In lightformulating its recommendation, our Board considered that given the nature of the current circumstances, the Board is askingour compensation programs, a triennial vote would be sufficient for our stockholders to approve this Proposalprovide us with their input on our compensation philosophy, policies and Proposal Two,practices. For example, our Chief Executive Officer has not received an equity award since 2018, and our other named executive officers have not received an equity award since 2020. A triennial approach also provides regular input by stockholders, while allowing time to giveevaluate the effects of our compensation program on performance over a longer period. However, we understand that our stockholders a greater voice by facilitating their abilitymay have different views as to effect changeswhat is the best approach for the Company, and we look forward to certain corporate and Board matters, and allowing them tohearing from our stockholders on this Proposal. The next advisory vote on the performancefrequency of the non-binding vote on executive compensation is expected to be held at the 2029 annual meeting.
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote in response to the resolution set forth below:
“RESOLVED, that the option of once every one year, two years or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a stockholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the other related disclosure.”
The Board will consider the frequency option that receives the greatest number of votes among the three frequency options to be the recommendation of the stockholders. However, this vote is advisory and is not binding on the Company, the Compensation Committee or our directors with greater frequency.
OurBoard. The Board believes in maintaining stockholder confidence through demonstrating its responsiveness to stockholder feedback and its commitment to strong corporate governance. Accordingly, the Board believesmay decide that it appropriate to give this greater voice to our stockholders in approving fundamental corporate matters and in more frequently approving the Board’s performance. However, Tesla is still at a point in its development where we may experience significant short-term swings in the price of our stock that are unrelated or disproportionate to our long-term prospects. Therefore, we will continue to oppose stockholder initiatives, like Proposal Six, which create opportunities for specialbest interests that seek only short-term returns. Likewise, the Board continues to oppose initiatives that seek to direct Tesla’s strategic business decisions and day-to-day operations in ways that are not critical to or in furtherance of Tesla’s core mission. The Board considers all reasonable stockholder viewpoints in good faith, but ultimately must consider the interests of all of our stockholders and what is best for sustainable value creation.
The Board recommends athe Company to hold an advisory vote FORon executive compensation more or less frequently than the Tesla proposal for the adoption of amendments tooption approved by our certificate of incorporation and bylaws to eliminate applicable supermajority voting requirements.
stockholders.
THE BOARD RECOMMENDS A TRIENNIAL VOTE AS THE FREQUENCY WITH WHICH STOCKHOLDERS
ARE PROVIDED AN ADVISORY VOTE ON EXECUTIVE COMPENSATION.
TESLA PROPOSAL FOR ADOPTION OF AMENDMENTS TO CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
We are submitting to our stockholders a vote to adopt the inclusion of certain provisions in the proposed Amended Certificate to increase the number of authorized shares of common stock by 4,000,000,000 shares (the “Authorized Shares Amendment”).
The Board has approved the Authorized Shares Amendment subject to its adoption by our stockholders. Accordingly, upon the approval of this Proposal by our stockholders, we will file the Amended Certificate including the Authorized Shares Amendment with the Secretary of State of the State of Delaware as soon as practicable following the 2022 Annual Meeting, at which time the Amended Certificate will become effective. In addition, if our stockholders also approve Proposal Two relating to an amendment of our certificate of incorporation to reduce the terms of our directors from three years to two years and Proposal Three relating to amendments of our governing documents to eliminate applicable supermajority voting requirements, the Amended Certificate we file will also include such applicable amendments. Finally, if our stockholders approve any or all of this Proposal, Proposal Two and Proposal Three, the Amended Certificate we file will also incorporate a prior certificate of amendment, effective February 1, 2017, to our certificate of incorporation to reflect the change of our corporate name from “Tesla Motors, Inc.” to “Tesla, Inc.,” which did not and does not require adoption by our stockholders. See “Proposal Two —Tesla Proposal for Adoption of Amendments to Certificate of Incorporation to Reduce Director Terms to Two Years” and “Proposal Three—Tesla Proposal for Adoption of Amendments to Certificate of Incorporation and Bylaws to Eliminate Applicable Supermajority Voting Requirements”above for more information.
Summary of the Proposed Amendment
The following is a summary of the proposed Authorized Shares Amendment, and is qualified in its entirety by reference to the full text of the Amended Certificate as set forth in Appendix A, specifically Section 4.1 thereof (with additions shown as underlined and deletions shown as struck through).
Our certificate of incorporation currently authorizes us to issue 2,100,000,000 shares, consisting of 2,000,000,000 shares of Common Stock, par value $0.001 per share, and 100,000,000 shares of Preferred Stock, par value $0.001 per share. The Authorized Shares Amendment provides for an increase in the number of authorized shares of Tesla’s common stock from 2,000,000,000 shares to 6,000,000,000 shares. The Authorized Shares Amendment would not change the total number of authorized shares of Preferred Stock.
Reasons for the Proposed Amendment
The primary purpose of the Authorized Shares Amendment is to facilitate a 3-for-1 split of our common stock in the form of a stock dividend (the “Stock Split”). As of June 6, 2022, we have 1,036,390,569 shares of common stock outstanding, and the current number of authorized shares of our common stock is 2,000,000,000, which is insufficient to effectuate the Stock Split. Our Board intends to approve the Stock Split, subject to and contingent upon stockholder approval of the Authorized Shares Amendment.
Our success depends on attracting and retaining excellent talent, not only through providing a respectful, safe, inclusive and equitable workplace, but also through offering outstanding benefits and highly competitive compensation packages. Unlike other manufacturers, we offer every employee the option of receiving equity. Since our stock split in August 2020 to June 6, 2022, our stock price has risen 43.5%. While this value appreciation has led to our employees benefiting enormously through the years, we want to make sure all employees, no matter when they join, have access to the same advantages. We believe the Stock Split would help reset the market price of our common stock so that our employees will have more flexibility in managing their equity, all of which, in our view, may help maximize stockholder value. In addition, as retail investors have expressed a high level of interest in investing in our stock, we believe the Stock Split will also make our common stock more accessible to our retail shareholders.
Except for shares reserved for issuance under existing equity compensation plans and shares that would be issued pursuant to the Stock Split, the Board has no current plans to issue additional shares of common stock. As such, the Authorized Shares Amendment represents a request for a proportionate increase in the number of authorized shares of common stock based on our planned Stock Split.
Tesla, Inc. 2023 Proxy Statement 25 |
While the Board has not proposed the increase in authorized shares of common stock to discourage tender offers or takeover attempts of the Company, the availability of these authorized shares for issuance may nonetheless have the effect of discouraging a merger, tender offer, proxy contest or other attempt to obtain control of the Company.
The Board recommends a vote FOR the Tesla proposal for the adoption of amendments to our certificate of incorporation to increase the number of authorized shares of common stock.
TESLA PROPOSAL TESLA PROPOSALFOR RATIFICATION RATIFICATIONOF APPOINTMENT APPOINTMENTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected PricewaterhouseCoopers LLP as Tesla’s independent registered public accounting firm to audit the consolidated financial statements of Tesla for the fiscal year ending December 31, 2022,2023, which will include an audit of the effectiveness of Tesla’s internal control over financial reporting. PricewaterhouseCoopers LLP has audited Tesla’s financial statements since 2005. A representative of PricewaterhouseCoopers LLP is expected to be present at the meeting, will have the opportunity to make a statement if he or she desires to do so and is expected to be available to respond to appropriate questions.
Stockholder ratification of the selection of our independent registered public accounting firm is a matter of good corporate practice. In the event that this selection is not ratified by the affirmative vote of a majority of voting power of the shares in person or by proxy at the meeting and entitled to vote on the subject matter, the appointment of the independent registered public accounting firm will be reconsidered by the Audit Committee. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of Tesla and our stockholders.
Principal Accounting Fees and Services
The following table presents fees billed for professional audit services and other services rendered to Tesla by PricewaterhouseCoopers LLP for the years ended December 31, 20202021 and 2021.2022. The dollar amounts in the table and accompanying footnotes are in thousands.
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| 2020 |
| 2021 |
| 2021 | 2022 | |||||||||
Audit Fees (1) |
| $ | 12,965 |
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| $ | 14,156 |
| $ | 14,156 | $ | 16,192 | ||||
Audit-Related Fees (2) |
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| — |
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| 184 |
| 184 | 44 | ||||||
Tax Fees (3) |
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| 1,456 |
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| 2,876 |
| 2,876 | 4,442 | ||||||
All Other Fees (4) |
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| 103 |
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| 62 |
| 62 | 134 | ||||||
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Total |
| $ | 14,524 |
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| $ | 17,278 |
| $ | 17,278 | $ | 20,812 |
(1) | Audit Fees consist of fees for professional services rendered for the audit of Tesla’s consolidated financial statements included in Tesla’s Annual Report on Form 10-K and for the review of the financial statements included in Tesla’s Quarterly Reports on Form 10-Q, as well as services that generally only Tesla’s independent registered public accounting firm can reasonably provide, including statutory audits and services rendered in connection with SEC filings. |
(2) | Audit-Related Fees in 2021 and 2022 consisted of fees for professional services for certain agreed upon procedures in conjunction with certain financing transactions and other attestation services. |
(3) | Tax Fees in |
(4) |
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Pre-Approval of Audit and Non-Audit Services
Tesla’s Audit Committee has adopted a policy for pre-approving audit and non-audit services and associated fees of Tesla’s independent registered public accounting firm. Under this policy, the Audit Committee must pre-approve all services and associated fees provided to Tesla by its independent registered public accounting firm, with certain de minimis exceptions described in the policy.
All PricewaterhouseCoopers LLP services and fees in fiscal 20202021 and 20212022 were pre-approved by the Audit Committee.
The Board recommends a vote
THE BOARD RECOMMENDS A VOTE FOR the Tesla proposal for the ratification of the appointment of PricewaterhouseCoopers THE TESLA PROPOSAL FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP as Tesla’ s independent registered public accounting firm for the fiscal year ending DecemberAS TESLA’ S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022.2023.
26 Tesla, Inc. 2023 Proxy Statement |
STOCKHOLDER PROPOSALS
PROPOSAL FIVE
STOCKHOLDER PROPOSAL REGARDING REPORTINGON KEY-PERSON RISK
Proposals Six through Thirteen are proposalsIn accordance with SEC rules, we received from our stockholders. Stockholdershave set forth a stockholder proposal, along with a supporting statement, exactly as submitted by Sumtris ehf. Sumtris ehf has informed us that it is the beneficial owner of more than 100 shares of Tesla’s common stock and intends to present the following proposal at the 2023 Annual Meeting. Sumtris ehf’s address is Vagnhöfði 8, 110, Reykjavik, Iceland. The stockholder proposal will vote on these proposalsbe required to be voted upon at our 2022the 2023 Annual Meeting only if the proponents or their qualified representatives present their proposals at the 2022 Annual Meeting and submit them for a vote. Upon receiving an oral or written request, we will promptly provide the name, address, and, to our knowledge, the number of known voting securities held by the proponents of the stockholder proposals. You may request this information (1) via mail to Tesla, Inc., 1 Tesla Road, Austin, Texas 78725, Attention: Legal Department with a copy sent by e-mail to shareholdermail@tesla.com or (2) via e-mail to shareholdermail@tesla.com.properly presented.
STOCKHOLDER PROPOSAL REGARDING PROXY ACCESS
Stockholder Proposal and Supporting Statement
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Proposal Six – Shareholder Proxy Access
Resolved: Shareholders ofRESOLVED, Tesla, Inc ("Company"Inc. (“Tesla” or “Company”) request our Board of directors take the steps necessary to enable shareholders without limits on group size, to aggregate their shares to equal 3% of our stock owned continuously for 3-years to enable shareholder proxy access with the following essential provision:
Nominating shareholders and unlimited groups of shareholders must have owned at least 3% of the Company's outstanding shares of common stock continuously for a period of at least 3-years.
The essential feature requested may allow employee owners to combine with institutional investors to nominate candidates.
Supporting Statement: Proxy access enables shareholders to put competing director candidates on the company ballot to see if they can get more votes than some of management's director candidates. This proposal helps ensure our Board will nominate directors with outstanding qualifications to avoid giving shareholders a reason to exercise access rights.
Proxy Access in the United States: Revisiting the Proposed SEC Rule1, a cost-benefit analysis by CFA Institute, found proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption,” raising US market capitalization by up to $140.3 billion. Governance Changes through Shareholder Initiatives: The Case of Proxy Access2 found a 0.5 percent average increase in shareholder value for proxy access targeted firms. Because of the group limits, the rule has only been used once, so actual benefits have gone unrealized.
Proxy access has been adopted by major companies, including 78% of the S&P 500. Adoption of this proposal will make our Company more competitive in its corporate governance. Two of our largest shareholders, BlackRock and Vanguard, voted in favor of 87% and 91% of shareholder proposals, respectively, to establish proxy access during the last 3.5 years.
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Adding urgency to this proposal is a recent study finding directors generally do not want to monitor and are not sure they can do so effectively.1 Corporate governance expert Nell Minow offered the following: “Usually directors at least pretend to acknowledge their legal obligation to provide oversight of CEOs on behalf of shareholders.” “This acknowledgment that directors see themselves as corporate cheerleaders instead of skeptics whose job is to push back, question, and insist on better is further proof that shareholders will need to support more Engine No. 1-style challenges.”2
Eliminating group limits would allow employee-shareholders with small holdings to join in nominating groups, opening communication channels between our Board and workers. Proxy access directors nominated by such groups may be more able to effectively monitor than typical outside directors and would bring a host of additional benefits.3
Enhance Shareholder Value, Vote FOR
Shareholder Proxy Access – Proposal 6
***
Opposing Statement of the Board
The Board has determined that this proposal would not serve the best interests of the Company or its stockholders, for the reasons stated below. At our 2018 annual meeting of stockholders, the stockholder proponent similarly proposed proxy access for stockholders. However, our stockholders did not approve that proposal.
The Company already has mechanisms to promote the accountability of the Board to its stockholders. The Nominating and Corporate Governance Committee of the Board (the “Committee”) is comprised entirely of independent directors. The Committee regularly reviews the composition, size and performance of the Board and its committees, evaluates individual Board members and identifies and evaluates candidates for election or re-election to the Board. The Company has also implemented means for stockholders to recommend director candidates for the Committee’s consideration, nominate candidates at stockholder meetings and contact the Board directly.
Second, through the Committee’s efforts, the Board has steadily added independent directors to the Board. For instance, the Committee recommended to the Board Kathleen Wilson-Thompson and Lawrence J. Ellison in 2018 to further bolster the Board’s expertise in workforce management and relations and technological innovation, and Hiromichi Mizuno in 2020 to add an additional perspective on global financial markets and economics and to further increase the international exposure and global mindset on the Board with insight and influence.
Third, the version of proxy access formulated by the proponent may create an opportunity for special interests that seek only short-term returns rather than having the Company’s long-term interests in mind. This is particularly harmful for a company like ours, which is still in an early stage of development and undergoing rapid growth. Like other fast-growing technology companies, we may experience significant short-term swings in the price of our stock that are unrelated to our long-term prospects, and the proposal would allow special interests seeking only short-term returns—or even our competitors—to take advantage of such swings to disrupt the focus of the Company.
Notably, the proposal provides no safeguards against stockholders seeking to use proxy access to nominate directors who will act only in their individual interests. In fact, the proposal would not ensure that the stockholders seeking proxy access be truly invested in the Company even on a short-term basis, as it would be available to individuals who have relinquished voting and investment power over their shares and hold a net short position. Indeed, this proposal could be exploited by corporate raiders solely to effect a change of control, which should not be the purpose or outcome of any proxy access provision.
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The stockholder proponent seems to believe that our directors do not serve as effective corporate leaders and monitors. In fact, our directors and their commitment to our Company’s long-term growth have been instrumental in making decisions that might have appeared counter-intuitive to those without deep past experience with and future insight into our history and roadmap, but which have set up the Company to achieve long-term success. Some examples include the Company’s decisions to (a) manufacture all-electric vehicles (EVs) from the ground up rather than being a mere supplier of EV components, (b) establish an international network of our own stores, service centers and proprietary Supercharger stations despite regulatory hurdles and the significant capital outlay required to do so, (c) acquire SolarCity to create the world’s first and only vertically integrated sustainable energy company, (d) build Gigafactory 1, the largest lithium-ion battery factory in the world, rather than attempt to rely on existing sources as other EV manufacturers have done and (e) compensate our Chief Executive Officer only if other shareholders realize tremendous value. These decisions have contributed substantially to Tesla’s sustained growth and operational successes to date, and are a significant reason why the annualized stockholder return since our 2010 IPO until December 31, 2021 equaled 65%.
The Board recognizes that proxy access is a topic of growing interest in the investor community, and will continue to monitor and consider this topic. We have a robust shareholder engagement program through which we connect with top shareholders regularly and monitor their views on governance matters, including proxy access. At this time, however, the Board believes that the process for director nomination and stockholder communication that we have already implemented is the right approach to provide a voice to our stockholders, while promoting their long-term returns and the Company’s ultimate success in its mission.
The Board recommends a vote AGAINST the stockholder proposal regarding proxy access.
STOCKHOLDER PROPOSAL REGARDING ANNUAL REPORTING ON ANTI-HARASSMENT AND DISCRIMINATION EFFORTS
Stockholder Proposal and Supporting Statement
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Resolved
Shareholders requestask the Board of Directors of Tesla, Inc. to oversee the preparation and maintenance of an annuala publicly-disclosed report on Tesla’s Key-Person Risk, including identification of key persons and actions to ameliorate the impacts of their potential loss.
Support: Tesla is frequently cited as a prominent example of a company that has so-called Key-Person Risk, due to the prominence of its CEO and the lack of a clear public succession plan or strategy to ameliorate the impacts of his loss.
According to a 2018 Morgan Stanley report, describingin 2017 59 S&P 500 CEOs left their companies, and quantifyingthese companies then underperformed the effectiveness and outcomesmarket by 11% in the subsequent 12 months. Loss of Company effortsa key person can be due to prevent harassment and discrimination against protected classes of employees, including, but not limiteddecisions from the key person to sexual harassment and racial discrimination. The report should disclosepart with the Company's progress on relevant metrics and targets, such as:
the total number and aggregate dollar amount of disputes settled bycompany; the company related to abuse, harassmentpart with the key person; or discrimination basedoutside factors (such as untimely death or disability)—and all of these are rarely easy to foresee long in advance.
The standard procedure for dealing with Key-Person Risk is:
1. | Identify key persons. |
2. | Document processes and procedures for their succession. |
3. | Spread knowledge / cross- train successors. |
4. | Manage communication with stakeholders |
5. | Financial mitigation of key-person loss impacts |
At present, Tesla shareholders can have little confidence that said risk has been at all ameliorated. Tesla specifically cites as a risk in its Q3 10-Q: “We are highly dependent on race, religion, sex, national origin, age, disability, genetic information, service member status, gender identity, or sexual orientation;
the company's progress toward reducingservices of Elon Musk, Technoking of Tesla and our Chief Executive Officer” - offering no explanation of how it plans to deal with said risk. We ask the average lengthboard to present to shareholders a clear and unambiguous Key-Person Risk amelioration strategy, documenting that all of time it takes to resolve sexual harassment or discrimination complaints, either through internal processes or through litigation; and
the total number of pending harassment or discrimination complaintsabove five points have been met so that shareholders can be confident that the company is seekingwill have qualified successors in mind who are prepared to resolve through internal processes or through litigation.
This report should not includelead the names of accusers or details of their settlements without their consent and should be prepared at a reasonable cost and omit any information that is proprietary, privileged, or violative of contractual obligations.
Supporting Statement
Information concerning complaints, legal disputes, and settlements (individually andcompany to success in the aggregate) areevent of great interest, and often material to investors. The SEC has shown increased attention to human capital management issues, as demonstrated by its 2020 rulemaking, and Chairman Gensler's public comments about upcoming additional disclosure proposals arid characterization of workforce as a “key asset.” There have been several high-profile derivative suits settled recently, including at Twentieth Century Fox, Wynn Resorts, and Alphabet, alleging boards breached their duties for failing to protect employees from discrimination and harassment, injuring the companies and their shareholders.
In Tesla's 2020 Diversity Equity and Impact Report the Company states, “We insist on equitable practices not just because it's the right thing to do, but because fair processes allow our team members to bring their whole selves to work. We value and include underrepresented communities at all levels of our company.” Nevertheless, there have been numerous news reports and allegations of gender and race discrimination, harassment and retaliation at the Company. In October 2021, a California jury returned a $137 million verdict, including $130 million in punitive damages, against the Company for its racially hostile work environment. It has been reported that most Tesla workers are currently bound by mandatory arbitration agreements, so consequently there is little transparency into the extent of workforce mismanagement.
A report such as the one requested would assist shareholders in assessing whether the Company is improving its workforce management. Civil rights violations within the workplace can result in substantial costs to companies, including fines and penalties, legal costs, costs related to absenteeism, and reduced productivity. A company's failure to properly manage its workforce can damage corporate goodwill, making it more difficult to retain and recruit employees, and jeopardize relationships with customers and partners.key-person departure.
***
Opposing Statement of the Board
The Board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders. Tesla’s goal is to create an environment where people love to come to work every day. We believe that it is essential to provide all employees, world-wide, 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. Additionally, in December 2021, we amended our Compensation Committee Charter to explicitly state that the Compensation Committee will review and oversee human capital management practices relating to our employees.
Our commitment to a safe workplace starts with training and prevention. We require every employee to review and acknowledge our Code of Business Ethics and Policy Against Discrimination & Harassment in the Workplace, and they are required to participate in an in-depth and interactive anti-harassment and anti-discrimination training. New employees receive their anti-harassment and discrimination training during new hire orientation. Collectively, this ensures that all employees understand how to create and promote a respectful workplace, assess potential situations sooner and escalate appropriately. In 2021, as part of our continued commitment to providing a safe and inclusive workplace we re-doubled our efforts to educate employees and managers as part of our “Respectful Recharge” program, where employees received additional training on workplace expectations, consequences for violating Tesla’s policies and avenues to raise concerns without fear of retaliation.
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. 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 to any member of management, Human Resources or Employee Relations. If they prefer to report another way, the 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. Human Resources, together with Employee Relations, will ensure that employee concerns are investigated promptly and impartially in a manner appropriate to the circumstances.
We remain confident in our commitment 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. We believe that our active Board oversight, existing policies and dedicated team effectively address the issues targeted by this proposal.
The Board recommends a vote AGAINST the stockholder proposal regarding annual reporting on anti-harassment and discrimination efforts.
STOCKHOLDER PROPOSAL REGARDING ANNUAL REPORTING ON BOARD DIVERSITY
Stockholder Proposal and Supporting Statement
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Racial and Gender Board Diversity Report
Whereas: Our nation's racial reckoning and coronavirus's illumination of vast social inequities has led companies to reevaluate their diversity, equity, and inclusion policies and goals. Board diversity is one important facet, as investors and companies recognize it can be accretive to long term value creation. Board diversity requirements, including Nasdaq's 2021 ruling and California's 2018 legislation, acknowledge the value of racially and gender diverse boards.
Research indicates board diversity is an important lever to increase shareholder value, resulting in higher revenues, higher Return on Assets, a more diverse workforce, enhanced corporate governance, and improved stakeholder relations.
Boston Consulting Group finds companies with greater board diversity had 19 percent higher revenues than competitors.
International Monetary Fund finds substituting one man for one woman on a board is associated with higher Return on Assets.
Credit Suisse finds as the percentage of women on the board increases, so does the percentage of women in leadership.
The University of Toronto finds companies with greater board diversity are less prone to accounting mistakes, business controversies, and poor investment decisions.
Harvard Law research finds companies may be better positioned to recognize and responddetrimental to the interests of diverse stakeholders.Tesla and our stockholders.
In responseContrary to this research, 61 percent of investors believe boards “should aimthe proponent’s claims, Tesla does recognize that recruiting and retaining a highly talented and experienced management team, not just the CEO, is critical to reflect the company's customer baseTesla’s success. The Board and the broader societiesmanagement of Tesla are best equipped to carry out succession planning, as well as to handle day-to-day hiring, promotion and termination decisions. Such decisions take into consideration numerous criteria that are continually adapted to meet the evolving demands of Tesla, as determined by the Board and management.
Adopting this proposal would cause unnecessary competitive harm to Tesla and undermine our efforts to recruit and retain management. The disclosures requested by the stockholder proponent, such as identification of key persons and the amelioration of their potential loss, would lead to potential disclosure of confidential and sensitive information such as our
Tesla, Inc. 2023 Proxy Statement 27 |
business strategy and outlook, our most promising internal candidates, any desirable external candidates and other factors that our Board currently considers in which they operatethe succession planning process. By publicly naming key persons and disclosing mitigation action plans, the proposal invites our competitors to target and recruit high-value executives away from Tesla, including those who may be identified as potential successors as part of succession planning. Furthermore, executives who are not identified as key persons or potential successors may choose to voluntarily leave Tesla and may create unwelcome tensions amongst the management team.
Additionally, the Board already devotes significant time to leadership development efforts and implements several of the procedures discussed by includingthe proponent above. Through regular discussions in meetings and executive sessions at both the Board and Committee level, the Board follows certain processes regarding the evaluation of management positions. Furthermore, the Compensation Committee provides guidance for, and reviews and approves, key leadership hiring and development, and retention plans to manage and mitigate the loss of any key persons. Our directors drawn from racialalso regularly communicate and ethnic minority groups” (Institutional Shareholder Services).engage with management talent and potential successors to management positions in meetings held throughout the year, as well as through informal events and interactions, allowing them to further identify and provide exposure to qualified successors. From an external standpoint, during Tesla’s Investor Day, held in March 2023, we provided our stockholders additional visibility into our management team.
As a result, this proposal, if adopted, would constrain the ability of the Board and management to effectively oversee and manage succession planning, day-to-day hiring, promotion and termination decisions, that require consideration of numerous criteria that are continually adapted to meet the ever-evolving demands of a company as dynamic as Tesla.
In light of the foregoing, we believe the proposal would be detrimental to the interests of Tesla does not report its current gender or racial and ethnic board composition, but Tesla's board demographics appear largely disproportionate from its customer base. Bloomberg reports theour stockholders.
THE BOARD RECOMMENDS A VOTE AGAINST THE STOCKHOLDER PROPOSAL REGARDING
REPORTING ON KEY-PERSON RISK.
28 Tesla, Inc. 2023 Proxy Statement |
CORPORATE GOVERNANCE
Succession Planning
The Board of Directors is comprised of 22 percent women. The demographic makeup ofregularly discusses management succession planning in meetings and executive sessions at both the United States, used here as a proxy for Tesla's customer base, is comprised of 51 percent womenBoard and 42 percent minorities.
We believe that a Board of Directors with racial and gender composition reflective of Tesla's customer base and/or regions in which it operates will more astutely minimize business risk, maximize opportunity, and increase shareholder value.
Resolved: Shareholders request that Tesla report annually on its policies and practices to help ensure its elected Board of Directors attains racial and gender representation that is better aligned with the demographics of its customers and/or regions in which it operates.
The report should be prepared at reasonable cost, omitting proprietary information, litigation strategy and legal compliance information.
Supporting Statement: A report adequate for investors could, with board discretion, include disclosure of:
Board targets aligned with customer demographics (for example, using company's country/state headquarter demographics as a proxy)
Progress/challenges meeting racial and/or gender board diversity targets
Strategies or practices deployed to increase diversity of board candidates
***
Opposing Statement of the Board
The Board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders.
Tesla is committed to Diversity, Equity and Inclusion (DEI) principles at all levels of our organization. We use a people-first and data-driven approach to champion DEICommittee level. As described in our businessCorporate Governance Guidelines and inits charter, the communities in which we operate.
In the “Process and Considerations for Nominating Board Candidates” section, our proxy statement already includes detailed disclosures about the criteria our Nominating and Corporate Governance Committee considers when nominating Board candidates. Diversity is included as one of the important factors. Two of the three directors we added in the past four years are gender, racially and/or ethnically diverse and the chairperson of our Board is a woman. In 2021 and 2022, we enhanced our disclosures by reporting the gender and racial composition of the Board in our Impact Report, and beginning in 2022 we have similarly made such disclosures in our proxy statement regarding Board diversity. In addition, to underscore our commitment to diversity and provide additional transparency, we began providing EEO-1 data for US employees in our Impact Report beginning in 2022.
The Committee conducts annual evaluations of our Board effectiveness, providing it with an opportunity to examine whether our Board members have the right composition of skills and experiences. When identifying and recommending new candidates, the Committee continues to consider opportunities to increase our Board diversity in a way that supports the current and anticipated needs of the Company.
For these reasons, we believe that the current scope of Tesla’s reporting is appropriate in that it provides stockholders with visibility into our Board demographics and the steps we have taken to successfully increase the Board’s diversity.
The Board recommends a vote AGAINST the stockholder proposal regarding annual reporting on board diversity.
STOCKHOLDER PROPOSAL REGARDING REPORTING ON EMPLOYEE ARBITRATION
Stockholder Proposal and Supporting Statement
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RESOLVED:
Shareholders of Tesla, Inc. (“Tesla”) ask the Board of Directors to oversee the preparation of a publicly-disclosed report on the impact of the use of mandatory arbitration on Tesla’s brand, employees and workplace culture. The report should evaluate the impact of Tesla’s current use of arbitration on the prevalence of harassment and discrimination in its workplace, on employees’ ability to seek redress, and on consumer perceptions of Tesla as an employer. The report should be prepared at reasonable cost and omit proprietary and personal information.
WHEREAS:
A workplace that tolerates harassment and discrimination invites legal, brand, financial, and human capital risk. Companies may experience reduced morale, lost productivity, absenteeism, and challenges in attracting and retaining talent. A number of studies have found significant share value benefits associated with diverse, equitable and inclusive workplaces.
Tesla requires employees to agree to arbitrate employment-related claims. Mandatory arbitration limits employees’ remedies for wrongdoing, reduces employee willingness to report discrimination1 and, per the U.S. Equal Employment Opportunity Commission (EEOC), “can shield serial harassers from accountability and allow them to repeatedly abuse employees.”2 Arbitration also prevents class-action suits, which may allow a sense of impunity for companies with poorly implemented or managed diversity, equity and inclusion policies.
These concerns are particularly relevant to Tesla. The California’s Department of Fair Employment and Housing, which is not subject to Tesla’s arbitration provisions, announced in February 2022 that it would be suing Tesla after receiving hundreds of complaints and conducting a three-year investigation. Allegations include that employees were subjected to racial slurs; segregated and discriminated against in job assignments, pay, and promotion; and faced retaliation when they reported their experiences.3 This lawsuit joins numerous other allegations of racial or sexual harassment and discrimination at Tesla.4
Ongoing use of employee arbitration creates a long-tail risk for Tesla, particularly as the company faces a changing regulatory landscape with the passage of The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act. This Act prohibits the use of arbitration when there are claims of sexual harassment. In addition, in California, employers are not allowed to retaliate against employees that refuse to sign arbitration agreements.5
A number of companies have ceased, or never required, employees to arbitrate discrimination claims. This includes Adobe, AirBnb, Google, IBM, Intel, Microsoft, Salesforce and Uber, which have relaxed or do not use these policies, as well as Google, whose use of arbitration was identified as a key aspect of a “culture of concealment” in its $310 million misconduct settlement.6
Tesla’s valuable brand would be harmed by an association with racist, sexist, or other discriminatory behaviors. Its future success also relies on its ability to innovate, and to implement those innovations effectively. For investors to have confidence that it will be able to do this well, Tesla must also have confidence that the company has effective human capital management systems.
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Opposing Statement of the Board
The Board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders. As with the similar proposal presented by this proponent at the 2020 and 2021 annual meetings of stockholders, both of which were rejected by Tesla’s stockholders, the proponent cites inaccurate and unsupported assertions regarding arbitration and its alleged impact on workplace conditions at Tesla.
Much of the proposal has been obviated due to a recent change in the law. As the proponent recognizes, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act now prohibits employers from enforcing standard arbitration provisions for these types of claims that arise after the date of the law’s enactment. Tesla will fully comply with the new law and has already taken steps to amend the standard arbitration clause in its new hire agreement. Obviously, there is no need for Tesla to issue a report about the effects of arbitration on the existence of sexual harassment in the workplace when such claims will no longer be arbitrable, unless the employee so chooses.
Still, Congress has not ended arbitration for other types of workplace claims, and Tesla continues to believe that arbitration remains the best method for resolving such disputes.
The proponent incorrectly asserts that there is a connection between arbitration and workplace culture. Tesla has a zero-tolerance policy for harassment of any kind, and we have always disciplined and terminated employees who engage in misconduct, including those who use racial slurs or harass others in different ways. We have a dedicated Employee Relations team that responds to and investigates all such complaints. This year, we rolled out an additional training program that reinforces Tesla’s requirement that all employees must treat each other with respect and reminds employees about the numerous ways they can report concerns, including anonymously. Above all, Tesla continues to seek to provide a workplace that is safe, respectful, fair and inclusive—all of which are vital to achieving our mission.
Contrary to what the proponent claims, Tesla’s standard arbitration provision specifically states that the parties are entitled to all remedies available in a court of law. The fact that a claim is not adjudicated by a court or does not have certain procedural aspects does not mean that legal remedies are not available through arbitration. Arbitration offers an alternative form of adjudication by an experienced jurist selected with both parties’ participation that is often quicker than a court trial, especially in jurisdictions where courts are overburdened. The overall expediency benefits both parties with a fair resolution and a speedier return to their respective priorities without miring them in lengthy litigation. The proponent fails to acknowledge that there are potential downsides to litigating matters in court, including costs associated with delays and the risk of jury verdicts that are untethered to the evidence presented and based on bias and emotion, rather than reality. Broken judicial systems may benefit plaintiff’s lawyers, but they do not benefit stockholders.
The proponent also fails to explain how arbitration prevents Tesla employees from learning about shared concerns or reduces willingness to report claims. Tesla has been built upon a culture of open communication, and employees have the right to freely discuss the terms and conditions of employment and to raise complaints internally or externally. An employee is free to publicize the results of an arbitration (as long as it excludes any trade secrets or proprietary business information), and to initiate a lawsuit by first filing a complaint in court. Arbitration does nothing to silence alleged victims.
As we pledged in our annual Impact Report, Tesla designed its workplace and policies to provide all employees with a respectful and safe working environment by not tolerating any discrimination, harassment, retaliation or any other mistreatment at work, whether based on a legally protected status or otherwise. On the other hand, the proponent’s one-size-fits-all goal appears to be that every company simply eliminate employee arbitration without considering such commitments and action. The proponent makes conclusory statements about other companies and their arbitration policies without considering or specifying how such other companies may or may not be similarly situated to Tesla.
We reiterate that Tesla, its employees and its stockholders would be better served by continuing to execute on our mission and tangible workplace goals rather than devote attention and resources to reporting on an inaccurately characterized issue for which the proponent has identified no tangible benefit to Tesla, its workers or its stockholders.
The Board recommends a vote AGAINST the stockholder proposal regarding reporting on employee arbitration.
STOCKHOLDER PROPOSAL REGARDING REPORTING ON LOBBYING
Stockholder Proposal and Supporting Statement
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RESOLVED:ShareholdersrequestthattheBoardofDirectorsconductanevaluationand issueareport(atreasonablecost,omittingproprietaryinformation)describingif,andhow, Tesla Inc.’s (“Tesla’s”) lobbying and policy influence activities (direct and through trade associations and social welfare and nonprofit organizations) align with the Paris Agreement’s goal to limit average global warming to 1.5 degrees Celsius, and how Tesla plans to mitigate risks presented by any misalignment. The evaluation should examine underlying direct and indirect lobbying activities and not rely solely on publicly stated positions to determinealignment with the Paris Agreement.
SUPPORTING STATEMENT
Recent reports highlight critical gaps between the climate commitments made by national governments and the actions necessary to prevent the worst effects of climate change.1 An April 2022 Intergovernmental Panel on Climate Change assessment makes it clear that nations are not doing enough to limit global warming2 to 1.5 degrees Celsius and that this goal is now almost entirely out of reach unless immediate and dramatic changes are implemented to limit fossil fuel use and re-envision energy, transport, and land development. Society now has just a slim chance of meeting this goal.3
Companies like Tesla have a crucial role to play in empowering policymakers to close these gaps. Investors need clear information on how companies are taking action to do so, including an assessment of the alignment between companies’ policy advocacy and both the goals of the Paris Agreement and companies’ own climate commitments and policy advocacy.4
Of particular concern is policy advocacy done by trade associations and other organizations that often present major obstacles to the implementation of climate policies. Companies may tout their own climate efforts, but often fail to account for their support for organizations and initiatives that work to block critical climate policies.
Tesla wants to “accelerate the world’s transition to sustainable energy.”5 Yet it is unclear how Tesla uses public policy engagement or other forms of lobbying to achieve this aim. Tesla’s 2020 Impact Report discusses neither its climate policy priorities, nor the policy strategies and goals that would assist Tesla in meeting its sustainable business objectives. Tesla does not appear to disclose the trade associations, business alliances, or social welfare organizations in which it participates. Tesla’s governance documents do not cover political engagement or lobbying and there is no mention of Board or executive oversight for lobbying activities in its Board Committee charters. It is therefore difficult for investors to determine if Tesla’s policy engagement aligns with the goals of the Paris Agreement and the Company’s own strategic business goals.
Corporate lobbying that is inconsistent with the goals of the Paris Agreement poses mounting systemic risks to our financial systems and infrastructure, as delays in curbing greenhouse gases increase physical risks from extreme weather, threaten regional economic stability, and heighten portfolio volatility.6 Proponents view fulfillment of the Paris Agreement as imperative because climate scenarios of 3 degrees Celsius or more are unacceptable and uninvestable.
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Opposing Statement of the Board
The Board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders.
The stockholder proponent purports to care about curbing the worst effects of climate change, and yet chooses to devote its attention and criticisms on one of the most well-known and successful clean energy companies in the world. From day one, Tesla’s mission has been to accelerate the world’s transition to sustainable energy, and we have made substantial and concrete strides towards our goals. In 2021, the global fleet of Tesla vehicles, energy storage and solar panels enabled our customers to avoid emitting 8.4 million metric tons of CO2e. Unlike traditional automotive manufacturers, we have based the success of our entire business upon values that align with the Paris Agreement’s goal to limit global warming.
Our political engagement and lobbying activities reflect our mission, and are directly focused on hastening the world’s transition to zero emission vehicles and expanding and prioritizing the use of renewable energy. To this end, we file publicly available federal Lobbying Disclosure Act Reports each quarter, which provide information about expendituresperiodically reviews succession planning for the quarter, describes the specific legislation that was the topic of communications and identifies the individual who lobbied on our behalf. A simple online search by the stockholder proponent would provide it with the answers it seeks about our political engagement and lobbying activities.
Due to the importance public policy decisions will have on our strategies, operations and shareholder value, we have put in place certain practices and processes in order to ensure that our political engagement activities align with our mission. Our Senior Director of Government Relations and Policy directly reports to our Chief Executive Officer and regularly reports on progressother executive officers, reporting its findings and initiatives to our Board members.
Because our existing disclosures already provide stockholders with ample information on our lobbying activities, and the alignment of Tesla’s mission and actionsrecommendations to the Paris Agreement, we believe that Tesla, its employeesBoard and its stockholders are better served by continuingworks with the Board in evaluating potential successors to execute on our mission rather than devoting attentionthese executive management positions. The Compensation Committee regularly discusses and resources to additional reporting.
The Board recommends a vote AGAINST the stockholder proposal regarding reporting on lobbying.
STOCKHOLDER PROPOSAL REGARDING ADOPTION OF A FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING POLICY
Stockholder Proposalevaluates company-wide talent pools and Supporting Statement
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RESOLVED: theBoardofDirectorssuccession plans, including short-term and long-term succession plans for development, retention and replacement of Tesla,Inc.(“Tesla”or“thecompany”)toadoptandpublicly disclose apolicyonits commitment to respect the rights to freedom of association and collective bargaining in its operations, as reflected in the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work (“Fundamental Principles”). The policy should:
BeapplicabletoTesla’sdirectoperationsandsubsidiaries globally;
Includeacommitmenttonon-interferencewhenemployeesexercisetheirrighttoformorjointradeunions;
ProhibitanymemberofmanagementoragentofTeslafromunderminingtherighttoformorjointradeunions or pressuring any employee from exercising this right;
DescribetheongoingduediligenceprocessTeslawillusetoidentify,prevent,mitigateandaccountforany violations of these rights, including how it will remedy any misaligned practices.
SUPPORTING STATEMENT: Freedom of association and collective bargaining are fundamental human rights protected bynationalandinternationallegalstandardsincludingtheILOFundamentalPrinciplesandtheUNUniversalDeclaration of Human Rights.
The ability of workers to organize, act concertedly,senior leaders. Directors regularly interact and engage with not only senior management talent and potential successors to executive management positions, but also high-potential leaders throughout the Company. This engagement occurs in collective bargaining is an important human right that can be a net positive for companies and investors.
Despite a recent public invitation1byBoard meetings held throughout the company’s CEO for labor unions to organize a vote at Tesla’s California factory without interference, Tesla does not have any formal policy commitments to respect the right to freedom of association, nor has it demonstrated how it would effectively operationalize such a commitment. While the Company’s Supplier Code of Conduct2articulates the Company’s expectations of suppliers in this regard, it has no corresponding policies for its own operations.
In fact, the Company has been accused of limiting the exercise of fundamental labor rights through tactics of interference,3intimidation,4and retaliation against employees involved in unionization efforts. In 2021, the National Labor Relations Board upheld5a 2019 ruling that Tesla illegally fired a worker involved in union organizing, and that the CEO had illegally threatened workers regarding unionization.
These allegations, against the backdrop of claims of racial discrimination and sexual harassment6by former Tesla employees and reports of poor working conditions,7represent material reputational, legal and operational risks to its shareholders. Allegations of interference with unionization efforts, and resulting regulatory enforcement, at other8companies9further demonstrate the significance of these risks.
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The transition to a low-carbon future cannot come at the expense of workers’ rights. It is crucial for shareholders to understand how Tesla’s policies and practices respect fundamental labor rights. Greater transparency on these issues would help address concerns about the company’s reputation, clarify its commitment to basic human rights, enable investors to perform their own due diligence according to their fiduciary duty and protect long-term shareholder value.
We urge fellow shareholders to vote FOR this resolution.
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Opposing Statement of the Board
The Board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders.
The ethical treatment of all people and regard for human rights is core to our mission of promoting a sustainable future. We endorse and base our definition of human rights on the United Nation's 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 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, to bargain collectively, to engage in peaceful assembly,year, 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 communicatethrough informal events and share ideasupdates, and concerns with management regarding working conditions and management practices without fear of discrimination, reprisal, intimidation or harassment.regular one-on-one touchpoints.
We have more than 100,000 employees worldwide, and we comply with all applicable local laws related to freedom of association and collective bargaining, and respect internationally recognized human rights in all the areas we operate. In Germany, where we have just opened Gigafactory Berlin, 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 manager training on employee rights, including the freedom of association. These actions speak for themselves. The stockholder proponent is asking Tesla to expend resources to create and maintain a policy framework and additional administrative bureaucracy, which will not meaningfully alter Tesla’s commitment to human rights.
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 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 member of management or their HR partner. We also operate an Integrity Line, which is available 24 hours a day, seven days a week, for employees to anonymously report concerns without fear of retaliation. In addition, our global Take Charge program enables employees to report 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.
A talented and engaged 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 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. In addition, unlike other manufacturers, every single employee of our Company has the option of receiving equity, which can result in significantly higher compensation beyond our already industry-leading base compensation.
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, this proposal would not create additional benefits to our employees or value for our shareholders.
The Board recommends a vote AGAINST the stockholder proposal regarding Adoption of a freedom of association and collective bargaining policy.
STOCKHOLDER PROPOSAL REGARDING ADDITIONAL REPORTING ON CHILD LABOR
Stockholder Proposal and Supporting Statement
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End Child Labor in Electric Vehicle Battery Production
2022-Tesla, Inc.
Resolved: Shareholders request that the Board of Directors issue a public report, at reasonable cost andomittingproprietaryinformation,describingif,andhow, Tesla’spoliciesandpractices governingthe sourcingofbatterymineralsandprogresstowardscobalt-freebattery goalswillput the Company on course to eradicate child labor in all forms from its battery supply chain by 2025. Reportingis requestedwithinone year from Tesla’s 2022 annualmeeting.
Whereas: Sourcingcobaltforelectricvehiclebatteriesfromminingcompaniesfacingongoing allegationsofchild laborand poorworkingconditions poses materialrisksto Tesla.1The Democratic Republic of Congo (DRC) supplies 70% of the world’s cobalt and child labor iswell documentedin artisanalmines.2TheILOrecognizescobaltmining ashazardouswork and oneofthe worst forms of childlabor, as childrenwork with sharp tools in mines at risk of collapse.3ILO Convention182 calls forurgentactionto eliminate these forms,and SustainableDevelopmentGoal8.7calls to end allchildlaborby 2025; yetvoluntarycorporateactionshave failedtoeradicatehazardouschild labor from cobalt mining.4
Child labor in the cobalt supply chain exposes Tesla and its investors to financial, legal, and reputational risks. In 2019, a class action lawsuit was filed against Tesla and four technology companies for allegedly “aiding and abetting in the death and serious injury of children who claim they were working in cobalt mines in their supply chain.”5In the joint motion to dismiss, defendants did not challenge the fact that child labor is occurring in their cobalt supply chains, but argued that conduct by their suppliers is out of their control, which conflicts with Tesla’s policies that the company claims prohibit its suppliers from using child labor.6This argument disregards and seeks to undermine corporate responsibilities for human rights impacts associated with business relationships and the power buyers have to require adherence to a zero-tolerance policy for child labor, or risk being dropped as a supplier.7Plaintiffs filed an appeal following the 2021 court ruling..8
While Tesla reports on cobalt sourcing procedures, multistakeholder initiatives, and pilots, these disclosures fail to demonstrate that its cobalt supply chain is free of child labor. Investors will not have this assurance unless Tesla implements supplier requirements, not expectations, that are binding, enforceable, and regularly monitored for compliance with national and international laws prohibiting child labor and the company’s own policies.
As Tesla aims to phase out cobalt in its electric vehicle batteries and seeks to position itself as a socially responsible company, the company remains exposed to human rights risks in the supply chains for other critical transition minerals..9
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Opposing Statement of the Board
The Board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders.
As we noted in response to the proposal requesting additional reporting regarding human rights that was presented by the same proponent at the 2021 annual meeting of stockholders, which was rejected by Tesla’s stockholders, Tesla’s annual Impact Report already describes how human rights values, including those related to child labor, are respected in our operations. The proponent’s justification for additional reporting on child labor appears to be based on legal proceedings that have been dismissed by the court, and the proponent uses the argument made by the defendants in their motion to dismiss to imply that Tesla, as a defendant, is not taking action to identify and eliminate child labor from its supply chain. In fact, protecting human rights is core to Tesla’s procurement strategy and the position taken in these proceedings that our actions could not have met the standard for legal causation does nothing to undermine that fact. Indeed, because Tesla recognizes the risk of human rights issues within global cobalt supply chains, 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 and High-Risk Countries. 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 (for its part, the OECD has identified reporting on risk mitigation as being very weak across the industry). As stated in the Impact Report, in the event that modern slavery, child labor or human trafficking is identified in our supply chain and has not been remediated by the supplier within a reasonable time frame, Tesla will transition away from that supplier.
Based on the risk identification procedures mentioned below and described more fully in our Impact Report, Tesla does in fact disclose in our Impact Report that we have found no evidence to date of Tesla causing, contributing to or being linked to child labor, modern slavery or human trafficking in our supply chain. In fact, we can be more confident of this than other OEMs due to our unique sourcing strategy: Rather than relying on companies that typically sit between OEMs and mining companies, we source our cobalt directly from mine sites. This means we can be more confident about where our cobalt comes from and can confirm, based on best practice risk identification, that we do not source from artisanal and small-scale mining (ASM), which is typically at risk of child labor. Rather, we source our cobalt from industrial mines, where no child labor has been identified to date.
In addition, we conduct our own audits of the mine sites and refiners in our cobalt supply chain and review results from third-party industry audit programs such as the Responsible Minerals Initiative (RMI)’s Responsible Minerals Assurance Process (RMAP). In 2021, 83% of refiners and mine sites in Tesla’s battery supply chain either underwent or committed to undergo independent external sustainability audits against RMAP and responsible mining standards. This was complemented by our own audits that assessed how specific cobalt and precursor suppliers conducted due diligence on their supply chain on OECD Annex II risks, which include child labor.
In 2021, a Tesla delegation conducted an on-the-ground assessment on environmental and social conditions in the DRC. While we do not source from ASM, the trip to the DRC helped us understand the importance of ASM for local livelihoods. This is why we fund and sit on the Steering Committee of the Fair Cobalt Alliance (FCA), a multi-stakeholder initiative to support the improvement of conditions in communities impacted by ASM. One of the achievements of the FCA is the development of referral system for children engaged in mining activities, including child labor notification protocol, remediation solution packages, and guidelines for case managers on remediation steps, and trainings related to child rights. One of the reasons for this support is to show that – despite not having identified it in our supply chain – we understand that child labor is an existing challenge in the DRC that requires structural solutions.
Tesla remains confident in our efforts and commitment to ensuring child labor is not part of our supply chain, and that our publicly available policies and disclosures already provide robust and transparent information on these matters.
The Board recommends a vote AGAINST the stockholder proposal regarding additional reporting on child labor.
STOCKHOLDER PROPOSAL REGARDING ADDITIONAL REPORTING ON WATER RISK
Stockholder Proposal and Supporting Statement
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WHEREAS: According to the 2021 IPCC report, climate change is intensifying the water cycle, resulting in more intense droughts globally. Climate change related water scarcity poses material risks to our company, including disruption of operations or lowered production capacity; disruption of supply chains; and political and legal risks related to competition for water resources.
Tesla’s manufacturing operations require large amounts of water. Tesla operates in California and Nevada, where water rights are contentious; in Austin, Texas, where droughts are becoming more frequent, and in water-impacted areas of Shanghai and Germany. All these regions have medium to high risk of water stress.1
Tesla’s factory location choices have caused public upset and reputational damage. Tesla recently opened a factory in Berlin-Brandenburg, an increasingly water depleted region.2 The facility, which will use as much water as a 30,000 person town, is sited on a drinking water protection zone and has raised intense public concern.3,4 Hours after authorities gave approval for Tesla to begin production, a judge ruled that the assessment of Tesla’s planned water use had not been thorough.5 Tesla’s Austin facility is the second largest factory globally; communities are raising concerns over the pressure Tesla will put on Austin’s long-term water supply.6
Increased transparency may reveal shortcomings in Tesla’s water planning, risk assessment, and siting policies. For instance, Tesla’s ability to successfully continue and expand operations at its Gigafactory in Berlin-Brandenburg may be water limited. The region’s water utility company identified water risk that could jeopardize the factory’s expansion.7,8
Peer companies GM, Ford, and Fiat Chrysler have developed water stewardship standards and report on water resource management including responding to CDP water. Tesla does not respond to CDP water requests, receiving an ‘F’ score annually since 2016.9
Tesla does report water reduction activities at certain facilities and shows that new factories will have a lower overall water withdrawal intensity than most peers. However, Tesla fails to provide facility-specific water reduction targets or use data; identify water risk at each location; assess and disclose supply chain related water risk; describe measures to reduce or avoid siting of facilities in high water risk areas; or describe its broader water risk management strategy.
RESOLVED: Shareholders request the Board assess and report its ongoing water risk exposure, and all policies and practices to reduce this risk, from siting of facilities to preparing for water supply reductions associated with climate change, using quantitative indicators where appropriate.
SUPPORTING STATEMENT: At management discretion, Proponents request reporting of:
Facility-specific water use and targets
Facility water risk assessment and policies, pre- and post-siting
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General water scarcity identification and planning procedures
Supply chain water risk assessments
Any water related engagement with supply chain partners
Integration of water management into governance mechanisms
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Opposing Statement of the Board
The Board has considered this proposal and determined that it would not serve the best interests of Tesla or our stockholders and would not add meaningfully to our water stewardship goals.
First, rather than actually understanding and analyzing what we do, the stockholder proponent cites outdated articles, sensational headlines and superficial analysis as proof of Tesla’s failure in water planning, risk assessment and siting policies and, therefore, the need for Tesla to have additional reporting on water risks and policies. As we discuss in our Impact Reports, including in our most recent Impact Report published in May 2022, Tesla already focuses on reducing our water usage, and has made innovations and strides on this issue. As climate change worsens, we recognize that water scarcity is an issue that will need to be tackled by everyone. Thus, even though Tesla already withdraws less water at facilities dedicated to vehicle manufacturing per vehicle than the majority of established carmakers, our goal is to be the industry leader in low water usage per vehicle, even when taking battery cell manufacturing into account. To help achieve that goal, Tesla has implemented water-use reduction projects and has a number of additional projects underway.
Before starting construction of Gigafactory Texas, we worked with a third-party to analyze water risks and used those findings in the planning and construction of the factory, as outlined in our Impact Report. For example, Gigafactory Texas will feature a rainwater harvesting system that can store up to 500,000 gallons of rainwater collected from 1,000,000 square feet of the factory’s roof. This harvested rainwater will be treated and recycled through on-site cooling towers, potentially saving over 7,500,000 gallons of city water annually. At Gigafactory Texas, we also reuse condensation water from our conditioned air for our cooling towers in lieu of just discarding it as wastewater.
To further conserve potable water, Tesla is investigating additional ways of using reclaimed wastewater to use in the cooling tower makeup at both Gigafactory Texas and Gigafactory Berlin-Brandenburg. This could result in the conservation of an estimated 40 million gallons of potable city water each year for Gigafactory Texas alone. At the new Gigafactory Berlin-Brandenburg facilities, we implemented water usage reduction initiatives like using hybrid cooling towers, eliminating quench tanks and introducing cascade rinsing systems in the paint shop and battery can wash process for cell manufacturing. In addition to our operations, as part of our battery supply chain strategy, we are prioritizing protecting water levels and water quality in waterways affected by supplier operations.
Additionally, Tesla is starting the process of assessing the physical climate risks for our manufacturing and other priority assets this year as part of our preparation for aligning with the Task Force on Climate-related Financial Disclosures (TFCD) framework, including impacts on water availability over the short and long term. Over time, our disclosure around water in our Impact Report will include findings from these activities.
To further validate their request for additional reporting on water risk, the proponent mistakenly applauds peer companies, who use more water per vehicle than Tesla, among other environmental metrics, simply for participating in an ESG survey, irrespective of their actual actions and results. Tesla believes it is more beneficial to our shareholders and the environment to continue to focus our efforts on actually making a substantive difference rather than simply providing an image of action. Therefore, Tesla chooses instead to continue to expend our time and resources by increasing the positive impacts of our products in parallel with increasing our environmental performance reporting in alignment with industry standards through our annual Impact Report.
For the reasons stated above, the Board does not believe implementing this proposal would add value to our stockholders.
The Board recommends a vote AGAINST the stockholder proposal regarding additional reporting on water risk.
During 2014, the Board determined to formally identify, approach and establish an active dialogue with our largest stockholders and conduct an extensive and recurring review of our corporate governance practices. We inaugurated a program of periodic investor outreach to ensure that Tesla’s Board and management understand and consider the issues that matter most to our stockholders. We have gradually expanded this program over time to include senior members of management and the Board, who have participated in hosting extended series of meetings with and preparing presentations to a broad base of investors. Through this program, we have received, and continue to periodically receive, helpful input regarding a number of stockholder-related matters, and we have adopted a number of significant changes to our corporate governance practices. Moreover, members of the Board and management from time to time seek input from our investors when considering important corporate actions, including our consideration of, and responses to, stockholder proposals that involve corporate governance and alignment with stockholder interests. For instance, in part arising from investor feedback to broaden the expertise on our Board, we added a new independent director, Hiromichi Mizuno, in early 2020 to lend his international, investment and other expertise to the Board.
We do not expect that we will always be able to address all of our stockholders’ feedback. However, we seek to optimize our corporate governance by continually refining our relevant policies, procedures and practices to align the needs of the Company with evolving regulations and best practices, issues raised by our stockholders and other factors as circumstances warrant.
Code of Business Ethics and Corporate Governance Guidelines
The Board sets high standards for Tesla’s workforce, officers and directors. Tesla is committed to establishing an operating framework that exercises appropriate oversight of responsibilities at all levels throughout the Company and managing its affairs in a manner consistent with rigorous principles of business ethics. Accordingly, Tesla has adopted a Code of Business Ethics, which was recently amended in December 2021, and which is applicable to Tesla and its subsidiaries’ directors, officers and personnel. Tesla has also adopted Corporate Governance Guidelines, which, in conjunction with our certificate of incorporation, bylaws and charters of the standing committees of the Board, form the framework for Tesla’s corporate governance. The Code of Business Ethics and the Corporate Governance Guidelines are each available on Tesla’s website at: http://ir.tesla.com/corporate. Tesla will disclose on its website any amendment to the Code of Business Ethics, as well as any waivers of the Code of Business Ethics, that are required to be disclosed by the rules of the SEC or The NASDAQ Stock Market LLC (“NASDAQ”).Nasdaq.
The Board periodically assesses, with the recommendation of the Nominating and Corporate Governance Committee, the independence of its non-employee members as defined in the listing standards of NASDAQNasdaq and applicable laws. The Board undertook an analysis for each non-employee director and director nominee and considered all relevant facts and circumstances, including the director’s other commercial, accounting, legal, banking, consulting, charitable and familial relationships. The Board determined that with respect to each of its current members and director nominee, other than Elon Musk, who is our Chief Executive Officer, and Kimbal Musk, who is Elon Musk’s brother, there are no disqualifying factors with respect to director independence enumerated in the listing standards of NASDAQNasdaq or any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and that each such member is an “independent director” as defined in the listing standards of NASDAQNasdaq and applicable laws.
In particular, the Board reviewed the following considerations:
Ira Ehrenpreis, James Murdoch, Elon Musk, Kimbal Musk and/or investment funds affiliated with them, have made minority investments in certain companies or investment funds, (i) of which other Tesla directors are founders, significant stockholders, directors, officers or managers, and/or (ii) with which Tesla has certain relationships set forth below in “Certain Relationships and Related Party Transactions—Related Party Transactions.” The Board concluded that none of these investments are material so as to impede the exercise of independent judgment by any of Messrs. Ehrenpreis or Murdoch, and that none of them has a direct or indirect interest in any transaction between Tesla and another company set forth below in “Certain Relationships and Related Party Transactions—Related Party Transactions.”
• | Ira Ehrenpreis, Joe Gebbia, James Murdoch, Elon Musk, Kimbal Musk and JB Straubel and/or investment funds affiliated with them, have made minority investments in certain companies or investment funds, (i) of which other Tesla directors are founders, significant stockholders, directors, officers or managers, and/or (ii) with which Tesla has certain relationships set forth below in “Certain Relationships and Related Party Transactions—Related Party Transactions.” The Board concluded that none of these investments are material so as to impede the exercise of independent judgment by any of Messrs. Ehrenpreis, Gebbia, Murdoch and Straubel. |
Lawrence J. Ellison and/or entities affiliated with him, have purchased certain Tesla products and services from Tesla. The Board concluded that such purchases were negotiated and completed through ordinary course sales processes in good faith on terms generally available to similar customers and would not impair the independent judgment of Mr. Ellison.
Mr. Ellison is an officer of a company from which Tesla has purchased business services. The Board concluded that such purchases were for standard offerings in the ordinary course of business pursuant to good faith contracting processes in which Mr. Ellison was neither involved nor had any material interest.
In addition, prior to his departure from the Board in October 2021, the Board had determined that Antonio Gracias was an independent director as defined in the listing standards of NASDAQ and applicable laws.
Roles of Chair of the Board
Following careful deliberation, the Board appointed Robyn Denholm to serve as the independent Chair of the Board in November 2018, having considered her strong leadership, independent presence and financial and business expertise on the Board over an extended period of time. Together, Ms. Denholm and our Chief Executive Officer, Elon Musk, comprise our senior Board leadership, which the Board believes is appropriate at this time to provide the most effective leadership structure for Tesla in a highly competitive and rapidly changing technology industry. As Chair of the Board, Ms. Denholm has broad authority and oversight over the affairs of the Board, with Mr. Musk available to her as a resource in this regard. Moreover, as an independent Chair of the Board, Ms. Denholm has the authority to direct the actions of the other independent directors and regularly communicate, as their representative, with Mr. Musk.
Tesla, Inc. 2023 Proxy Statement 29 |
As Chair of the Board, Ms. Denholm, among other things:
reviews the agenda and materials for meetings of the independent directors;
consults with our Chief Executive Officer regarding Board meeting agendas, schedules and materials;
acts as a liaison between our Chief Executive Officer and the independent directors when appropriate;
otherwise communicates regularly with our Chief Executive Officer;
raises issues with management on behalf of the independent directors;
annually reviews, together with the Nominating and Corporate Governance Committee, the Board’s performance during the prior year; and
serves as the Board’s liaison for consultation and communication with stockholders as appropriate.
Tesla also has a mechanism for stockholders to communicate directly with non-management directors (see “Corporate Governance—Contacting the Board” below).
In addition, the Board has four standing committees—the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Disclosure Controls Committee—which are each further described below. Each of the Board committees is comprisedconsists solely of independent directors, and the Board may appoint a chair to each committee. Our independent directors regularly meet in executive session and at such other times as necessary or appropriate as determined by the independent directors. In addition, as part of our governance review and succession planning, the Board (led by the Nominating and Corporate Governance Committee) evaluates our leadership structure to ensure that it remains the optimal structure for Tesla, reviews the composition, size and performance of the Board and its committees, evaluates individual Board members and identifies and evaluates candidates for election or re-election to the Board. See “Corporate Governance—Process and Considerations for Nominating Board Candidates” below for additional information.
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Board Role in Risk Oversight
The Board is responsible for overseeing the major risks facing Tesla while management is responsible for assessing and mitigating Tesla’s risks on a day-to-day basis. In addition, theThe Board has delegated oversight of certain categories of risk to the Audit Committee and the Compensation Committee,is assisted by our Committees, which are comprisedconsists entirely of independent directors. The Audit Committeedirectors, and the Compensation Committee respectively report to the Board as appropriate on matters that involve specific areas of risk that each Committee oversees.
Financial, Compliance and Controls Risks
Audit Committee The Audit Committee has scheduled periodic and annual reviews and discussions with management regarding significant risk exposures and incident metrics, including those relating to global financial, accounting and treasury matters, internal audit and controls, legal and regulatory compliance and data privacy and cybersecurity. These discussions cover the steps management has taken to monitor, control and report such exposures, as well as Tesla’s policies with respect to risk assessment and risk management. | Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee oversees the risks associated with the Company’s corporate governance structure, succession planning, independence and compliance with applicable laws and regulations. | |||
Disclosure Controls Committee The Disclosure Controls Committee oversees compliance and risks associated with the terms of the consent agreement between the SEC and the Company, and the controls and processes governing the Company’s and its senior executives’ disclosures and/or public statements that relate to the Company. |
Compensation Committee The Compensation Committee oversees management of risks relating to Tesla’s compensation plans and programs. Tesla’s management and the Compensation Committee have assessed the risks associated with Tesla’s compensation policies and practices for all employees, including non-executive officers. These include risks relating to setting ambitious targets for our employees’ compensation or the vesting of their equity awards, our emphasis on at-risk equity-based compensation, discrepancies in the values of equity-based compensation depending on employee tenure relative to increases in stock price over time and the potential impact of such factors on the retention or decision-making of our employees, particularly our senior management. Based on the results of this assessment, Tesla does not believe that its compensation policies and practices for all employees, including non-executive officers, create risks that are reasonably likely to have a material adverse effect on Tesla. |
Tesla, Inc. 2023 Proxy Statement 31 |
The Audit Committee has scheduled periodic and annual reviews and discussions with management regarding significant risk exposures and incident metrics, including those relating to global financial, accounting and treasury matters, internal audit and controls, legal and regulatory compliance and data privacy and cybersecurity. These discussions cover the steps management has taken to monitor, control and report such exposures, as well as Tesla’s policies with respect to risk assessment and risk management.
Employee Compensation Risks
The Compensation Committee oversees management of risks relating to Tesla’s compensation plans and programs. Tesla’s management and the Compensation Committee have assessed the risks associated with Tesla’s compensation policies and practices for all employees, including non-executive officers. These include risks relating to setting ambitious targets for our employees’ compensation or the vesting of their equity awards, our emphasis on at-risk equity-based compensation, discrepancies in the values of equity-based compensation depending on employee tenure relative to increases in stock price over time and the potential impact of such factors on the retention or decision-making of our employees, particularly our senior management. Based on the results of this assessment, Tesla does not believe that its compensation policies and practices for all employees, including non-executive officers, create risks that are reasonably likely to have a material adverse effect on Tesla.
During fiscal 2021,2022, the Board held sixeight meetings. We have a highly effective and engaged Board, and our Corporate Governance Guidelines provide that each member is expected to ensure that other existing and future commitments, including employment responsibilities and service on the boards of other entities, do not materially interfere with the member’s service as director. When considering the effectiveness and productivity of its members, the Board evaluates many factors, including the director’s attendance at meetings, the participation and input of the director and the director’s preparation at meetings.
Each director attended or participated in 75% or more of the aggregate of the total number of meetings of the Board and the total number of meetings of all Board Committees on which such director served (in each case held during such director’s relevant period of service), except for Lawrence J. Ellison, who was required to devote substantial time to an atypically high volume of critical business meetings in 2021..
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Audit Committee
The Audit Committee, which has been established in accordance with Section 3(a)(58) of the Exchange Act, currently consists of Robyn Denholm, Hiromichi Mizuno and James Murdoch, each of whom is “independent” as such term is defined for audit committee members by the listing standards of NASDAQ. Ms. Denholm is the chair of the Audit Committee. The Board has determined that Ms. Denholm is an “audit committee financial expert” as defined in the rules of the SEC.
The Audit Committee is responsible for, among other things:
Members | Primary Responsibilities Audit • Reviewing and approving the selection of Tesla’s independent auditors, and approving the audit and non-audit services to be performed by Tesla’s independent auditors • Discussing the scope and results of the audit with the independent auditors and reviewing with management and the independent auditors Tesla’s interim and year-end operating results | |||
Robyn Denholm | ||||
Joe Gebbia | ||||
James Murdoch | ||||
Hiromichi Mizuno(1) | ||||
Oversight and Compliance • Providing oversight, recommendations, and under specified thresholds, approvals, regarding significant financial matters and investment practices, including any material acquisitions and divestitures • Monitoring the integrity of Tesla’s financial statements and Tesla’s compliance with legal and regulatory requirements as they relate to financial statements or accounting matters • Reviewing the adequacy and effectiveness of Tesla’s internal control policies and procedures in addition to Tesla’s risk management, data privacy and data security | ||||
Reporting • Reviewing and discussing the accounting assessment of our annual Impact Report and other environmental, social and governance (ESG) disclosures • Preparing the audit committee report that the SEC requires in Tesla’s annual proxy statement Financial Expertise and Independence Each of member of the Audit Committee is “independent” as such term is defined for audit committee members by the listing standards of Nasdaq and applicable laws. The Board has determined that Ms. Denholm is an “audit committee financial expert” as defined in the rules of the SEC. Meetings Met 12 times in 2022 Charter The Audit Committee has adopted a written charter approved by the Board, which is available on Tesla’s website at: http://ir.tesla.com/corporate. Report The Audit Committee Report is included in this proxy statement on page 65. (1) Will not stand for re-election at the 2023 Annual Meeting. |
Tesla, Inc. 2023 Proxy Statement 33 |
reviewing and approving the selection of Tesla’s independent auditors, and approving the audit and non-audit services to be performed by Tesla’s independent auditors;
providing oversight, recommendations, and under specified thresholds, approvals, regarding significant financial matters and investment practices, including any material acquisitions and divestitures;
monitoring the integrity of Tesla’s financial statements and Tesla’s compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;
reviewing the adequacy and effectiveness of Tesla’s internal control policies and procedures in addition to Tesla’s risk management, data privacy and data security;
discussing the scope and results of the audit with the independent auditors and reviewing with management and the independent auditors Tesla’s interim and year-end operating results;
reviewing and discussing the accounting assessment of our annual Impact Report and other environmental, social and governance (ESG) disclosures; and
preparing the audit committee report that the SEC requires in Tesla’s annual proxy statement.
The Audit Committee held 13 meetings during fiscal 2021. The Audit Committee has adopted a written charter approved by the Board, which is available on Tesla’s website at: http://ir.tesla.com/corporate.
The Audit Committee Report is included in this proxy statement on page 66.
Compensation Committee
The Compensation Committee is currently comprised of Robyn Denholm, Ira Ehrenpreis and Kathleen Wilson-Thompson, each of whom qualifies as an independent director under the listing standards of NASDAQ. Mr. Ehrenpreis is the chair of the Compensation Committee.
The Compensation Committee is responsible for, among other things:
Members | Primary Responsibilities Compensation • Overseeing Tesla’s global compensation philosophy and policies, plans and benefit programs and making related recommendations to the Board, including by considering “say-on-pay” votes of Tesla’s stockholders • Reviewing and approving for Tesla’s executive officers: the annual base salary, equity compensation, employment agreements, severance arrangements and change in control arrangements, if applicable, and any other compensation, benefits or arrangements • Administering the compensation of members of the Board and Tesla’s equity compensation plans | |||
Ira Ehrenpreis | ||||
Robyn Denholm | ||||
Kathleen Wilson-Thompson | ||||
Human Capital • Reviewing human capital management practices related to Tesla’s talent generally (including how Tesla recruits, develops and retains diverse talent) Reporting • Preparing the compensation committee report included in Tesla’s annual proxy statement Independence Each member of the Compensation Committee qualifies as an independent director under the listing standards of Nasdaq and applicable laws. Meetings Met four times in 2022 Charter The Compensation Committee has adopted a written charter approved by the Board, which is available on Tesla’s website at: http://ir.tesla.com/corporate. Report The Compensation Committee Report is included in this proxy statement on page 48. |
overseeing Tesla’s global compensation philosophy and policies, plans and benefit programs and making related recommendations to the Board, including by considering “say-on-pay” votes of Tesla’s stockholders;
reviewing and approving for Tesla’s executive officers: the annual base salary, equity compensation, employment agreements, severance arrangements and change in control arrangements and any other compensation, benefits or arrangements;
administering the compensation of members of the Board and Tesla’s equity compensation plans;
reviewing human capital management practices related to Tesla’s talent generally (including how Tesla recruits, develops and retains diverse talent); and
preparing the compensation committee report that the SEC requires to be included in Tesla’s annual proxy statement.
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The Compensation Committee held ten meetings during fiscal 2021. The Compensation Committee has adopted a written charter approved by the Board, which is available on Tesla’s website at: http://ir.tesla.com/corporate.
The Compensation Committee Report is included in this proxy statement on page 54.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee currently consists of Robyn Denholm, Ira Ehrenpreis, James Murdoch and Kathleen Wilson-Thompson, each of whom qualifies as an independent director under the listing standards of NASDAQ. Mr. Ehrenpreis is the chair of the Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee is responsible for, among other things:
Members | Primary Responsibilities Board Composition and Evaluation • Assisting the Board in identifying prospective director nominees and recommending nominees for each annual meeting of stockholders to the Board • Overseeing the evaluation of Tesla’s Board and management • Recommending members for each Board committee to the Board | |||
Ira Ehrenpreis | ||||
Robyn Denholm | ||||
James Murdoch | ||||
Kathleen Wilson-Thompson | Corporate Governance • Reviewing developments in corporate governance practices and developing and recommending governance principles applicable to the Board • Reviewing the manner in and the process by which stockholders communicate with the Board • Reviewing the succession planning for Tesla’s executive officers Conflicts of Interest • Considering questions of possible conflicts of interest of Tesla’s directors and officers Independence Each of member of the Nominating and Corporate Governance Committee qualifies as an independent director under the listing standards of Nasdaq and applicable laws. Meetings Met five times in 2022 Charter The Nominating and Corporate Governance Committee has adopted a written charter approved by the Board, which is available on Tesla’s website at: http://ir.tesla.com/corporate. | |||
Tesla, Inc. 2023 Proxy Statement 35 |
assisting the Board in identifying prospective director nominees and recommending nominees for each annual meeting of stockholders to the Board;
reviewing developments in corporate governance practices and developing and recommending governance principles applicable to the Board;
considering questions of possible conflicts of interest of Tesla’s directors and officers;
reviewing the manner in and the process by which stockholders communicate with the Board and recommending Board responses;
reviewing the succession planning for Tesla’s executive officers;
overseeing the evaluation of Tesla’s Board and management; and
recommending members for each Board committee to the Board.
The Nominating and Corporate Governance Committee held seven meetings during fiscal 2021. The Nominating and Corporate Governance Committee has adopted a written charter approved by the Board, which is available on Tesla’s website at: http://ir.tesla.com/corporate.
The Disclosure Controls Committee currently consists of Robyn Denholm, James Murdoch and Kathleen Wilson-Thompson each of whom qualifies as an independent director under the listing standards of NASDAQ. Ms. Denholm is the chair of the Disclosure Controls Committee.
The Disclosure Controls Committee is responsible for, among other things:
Members | Primary Responsibilities • Overseeing the implementation of and compliance with the terms of Tesla’s consent agreement with the SEC dated September 29, 2018, as amended April 26, 2019 • Overseeing the controls and processes governing certain public disclosures by Tesla and its executive officers • Overseeing the review and resolution of certain conflicts of interest or other human resources issues involving any executive officer and ensuring appropriate disclosures, if applicable Independence Each of member of the Disclosure Controls Committee qualifies as an independent director under the listing standards of Nasdaq and applicable laws. Meetings Met five times in 2022 Charter The Disclosure Controls Committee has adopted a written charter approved by the Board, which is available on Tesla’s website at: http://ir.tesla.com/corporate. | |||
Robyn Denholm | ||||
James Murdoch | ||||
Kathleen Wilson-Thompson | ||||
overseeing the implementation of and compliance with the terms of Tesla’s consent agreement with the SEC dated September 29, 2018, as amended April 26, 2019;
overseeing the controls and processes governing certain public disclosures by Tesla and its executive officers; and
reviewing and resolving certain conflicts of interest or other human resources issues involving any executive officer and ensuring appropriate disclosures, if applicable.
The Disclosure Controls Committee held six meetings during fiscal 2021. The Disclosure Controls Committee has adopted a written charter approved by the Board, which is available on Tesla’s website at: http://ir.tesla.com/corporate.
Compensation Committee InterlocksInterlocks and Insider Participation
Robyn Denholm, Ira Ehrenpreis and Kathleen Wilson-Thompson served as members of the Compensation Committee during 2021.2022. None of such persons is or was formerly an officer or an employee of Tesla. See “Certain Relationships and Related Party Transactions—Related Party Transactions” below for certain transactions involving Tesla in which members of the Compensation Committee may potentially be deemed to have an indirect interest.
During 2021,2022, no interlocking relationships existed between any member of Tesla’s Board or Compensation Committee and any member of the board of directors or compensation committee of any other company.
Process and Considerations for Nominating Board Candidates
The Nominating and Corporate Governance Committee is responsible for, among other things, determining the criteria for Board membership, recommending Board candidates and proposing any changes to the composition of the Board. The Nominating and Corporate Governance Committee’s criteria and process for fulfilling these duties are generally as follows:
• | The Nominating and Corporate Governance Committee regularly reviews the current composition and size of the Board, and oversees an annual evaluation of the performance of the Board as a whole and of its individual members. The Nominating and Corporate Governance Committee applies uniform evaluation processes and standards for all Board members, including in identifying, considering or recommending new candidates for the Board to fill vacancies or add additional directors and in recommending existing Board members for nomination to be re-elected at annual meetings of stockholders. |
The Nominating and Corporate Governance Committee regularly reviews the current composition and size of the Board, and oversees an annual evaluation of the performance of the Board as a whole and of its individual members. The Nominating and Corporate Governance Committee applies uniform evaluation processes and standards for all Board members, including in identifying, considering or recommending new candidates for the Board to fill vacancies or add additional directors and in recommending existing Board members for nomination to be re-elected at annual meetings of stockholders.
In carrying out the foregoing duties, the Nominating and Corporate Governance Committee consistently seeks to achieve a complementary balance of knowledge, experience and capability on the Board. While the Nominating and Corporate Governance Committee has not established specific minimum qualifications for director candidates, it considers all pertinent factors that it considers appropriate, including diversity, and believes that the Board should be comprisedconsist of directors who (1) are predominantly independent, (2) are of high integrity, (3) have broad, business-related knowledge and experience at the policy-making level in business or technology, including their understanding of Tesla’s business in particular, (4) have qualifications that will increase overall Board effectiveness, (5) represent diversity of race, ethnicity, gender and (5)professional experience and (6) meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to Audit Committee members. For example, after conducting independent director searches from time to time in which numerous highly-qualified candidates from a variety of backgrounds were considered, the Nominating and Corporate Governance Committee recommended to the Board Lawrence J. Ellison and Kathleen Wilson-Thompson in 2018 to further bolster the Board’s expertise in technological innovation and workforce management and relations and Hiromichi Mizuno in 2020 to add an additional perspective on global financial markets and economics and to further increase the international exposure and global mindset on the Board with insight and influence.
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Board Joe Gebbia as director in 2022 and JB Straubel as director nominee in 2023, respectively, to further bolster the Board’s expertise in technological innovation, public company management and sustainability initiatives. |
In evaluating and identifying candidates, the Nominating and Corporate Governance Committee has the authority to retain and terminate any third party search firm that is used to identify director candidates and has the authority to approve the fees and retention terms of any search firm.
With regard to any candidates who are properly recommended by stockholders (as described in more detail below) or by other sources, the Nominating and Corporate Governance Committee will review the qualifications of any such candidate, which review may, in the Nominating and Corporate Governance Committee’s discretion, include interviewing references for the candidate, direct interviews with the candidate or other actions that the Nominating and Corporate Governance Committee deems necessary or proper.
After completing its review and evaluation of director candidates, the Nominating and Corporate Governance Committee recommends the director nominees that it has determined to be qualified to the full Board.
It is the policy of the Nominating and Corporate Governance Committee to consider properly submitted recommendations for candidates to the Board from stockholders. Stockholder recommendations for candidates to the Board must be directed in writing to Tesla, Inc., 1 Tesla Road, Austin, Texas 78725, Attention: Legal Department, and should also be sent by e-mail to shareholdermail@tesla.com. Such recommendations must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and Tesla within the last three years and evidence of the nominating person’s ownership of Tesla stock. Such recommendations must also include a statement from the recommending stockholder in support of the candidate, particularly within the context of the criteria for Board membership, including issues of character, integrity, judgment, diversity, age, independence, skills, education, expertise, business acumen, business experience, length of service, understanding of Tesla’s business, other commitments and the like, as well as any personal references and an indication of the candidate’s willingness to serve.
DiversityThe Board believes that gender and minority representation is a key element in achieving the broad range of perspectives that the Board seeks among its members. As such, diversity is one of the important factors the Nominating and Corporate Governance Committee considers when nominating Board candidates. Two of the threefour directors we added in the past four years are gender, racially and/or ethnically diverse and the chairperson of our Board is a woman. TheWe believe that such representation promotes a culture of inclusion and diversity at Tesla. In addition, the Nominating and Corporate Governance Committee conducts annual evaluations of our Board effectiveness, providing it with an opportunity to examine whether our Board members have the right composition of skills and experiences. When identifyingThe Board is committed to improving its current diversity, and recommending new candidates, the Committee continues to consider opportunities, including actively reaching out to increasediverse candidates, with the objective of increasing our Board diversity in a way that supports the current and anticipated needs of the Company.Company, and of achieving at least 30% gender diversity on our Board. In addition, we mandate external search firms, when applicable, to prioritize searches for candidates with racial, ethnic and/or gender diversity.
Board Diversity Matrix (As of June 10, 2022)April 6, 2023)
| Female | Male |
Total Number of Directors | 8 | |
Gender: | ||
Directors | 2 | 6 |
Number of Directors Who Identify in Any of the Categories Below: | ||
African American or Black | 1 | — |
Asian (other than South Asian) | — | 1 |
White | 1 | 5 |
Female | Male | |||||||
Total Number of Directors | 8 | |||||||
Gender: |
| |||||||
Directors | 2 | 6 | ||||||
Number of Directors Who Identify in Any of the Categories Below: |
| |||||||
African American or Black | 1 | — | ||||||
Asian (other than South Asian) | — | 1 | ||||||
White | 1 | 5 |
Attendance at Annual Meetings of Stockholders by the Board
Although Tesla does not have a formal policy regarding attendance by members of the Board at Tesla’s annual meetings of stockholders, directors are encouraged to attend. FiveAll of our directors who served at the time of the 20212022 annual meeting of stockholders attended such meeting, with seven attending in person, and each of the other directors joined via online webcast.remaining director joining remotely.
Tesla, Inc. 2023 Proxy Statement 37 |
Stock Transactions
Hedging, Short Sales and Rule 10b5-1 Trading Plans
Tesla has an insider trading policy that prohibits all of our directors, officers and employees from, among other things, engaging in short sales, hedging or similar transactions designed to decrease the risks associated with holding Tesla securities. This prohibition encompasses transactions in publicly-traded options, such as puts and calls, and other derivative securities with respect to Tesla securities, but not transactions designed to facilitate portfolio diversification, such as broad-based index options, futures or baskets.
In addition, two of Tesla’s current executive officers and one director have entered into Rule 10b5-1 trading plans that are effective as of the date of this filing.
Pledging of Shares
The ability of our directors and executive officers to pledge Tesla stock for personal loans and investments is inherently related to their compensation due to our use of equity awards and promotion of long-termism and an ownership culture. See “Executive Compensation—Pledging of Shares” below for more details on Tesla’s policy regarding the pledging of Tesla stock by such individuals.
Stock Ownership by Board and Management
To align the interests at the highest level of our management with those of our stockholders, the Board has instituted the following requirements relating to stock ownership under our Corporate Governance Guidelines.
Each member of the Board and all of our Chief Executive Officer isnamed executive officers are subject to the following minimum stock ownership requirements: (i) each director shallis required to own shares of Tesla stock equal in value to at least five times the annual cash retainer for directors (exclusive(regardless of whether or not the retainer has been waived, and exclusive of retainer amounts for service as a member or chair of a Board committee), and (ii) our Chief Executive Officer shallnamed executive officers are required to own shares of Tesla stock equal in value to at least six times his/her base salary. Each individual shall have five years from the date such person assumed his or her relevant role at Tesla to come into compliance with these ownership requirements. Each person’s compliance with the minimum stock ownership level will be determined on the date when this compliance grace period expires, and then annually on
each December 31, by multiplying the number of shares held by such person and the average closing price of those shares during the preceding month. Our Chief Executive Officernamed executive officers and each of our directors is currently either in compliance with these requirements or is in the applicable period to come into compliance therewith.
Our Corporate Governance Guidelines also provide that no equity award as to which vesting or the lapse of a period of restriction occurs based solely on the passage of time that is granted to a named executive officer may vest, or have a period of restriction that lapses, earlier than six months from the date on which such vesting or lapse commences. Furthermore, our Corporate Governance Guidelines provide that no named executive officer may sell, transfer, pledge, assign or otherwise dispose of any shares of Tesla stock acquired pursuant to any stock option, restricted stock unit or other equity award granted by Tesla earlier than the date that is six months after the date on which such award vests or the period of restriction with respect to such award lapses, as applicable.
Prohibition of Equity Award Repricing
Tesla views equity-based compensation to be a key factor in incentivizing the future performance of our personnel. Consequently, the Tesla, Inc. 2019 Equity Incentive Plan (the “2019 Plan”) provides, and Tesla’s previous 2010 Equity Incentive Plan provided, that stock options and other equity awards issued under these plans that derive their value from the appreciation of the value of Tesla’s stock may not be exchanged for other awards, repurchased for cash or otherwise be made the subject of transactions that have the purpose or effect of repricing such awards.
In addition, applicable NASDAQNasdaq rules prohibit any repricing with respect to the performance-based stock option award granted to Elon Musk in January 2018 (the “2018 CEO Performance Award”).2018.
Any stockholder who desires to contact our non-employee directors regarding appropriate Tesla business-related comments may do so electronically at the following website: http://ir.tesla.com/corporate-governance/contact-the-board. Such stockholders who desire to contact our non-employee directors by mail may do so by writing to Tesla, Inc., 1 Tesla Road, Austin, TX 78725, Attention: Legal Department. Our General Counsel, or someone acting in his or her place or his or her designee, receives these communications unfiltered by Tesla, forwards communications to the appropriate committee of the Board or non-employee director, and facilitates an appropriate response. Please note that requests for investor relations materials should be sent to ir@tesla.com.
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EXECUTIVE OFFICERS
The names of Tesla’s executive officers, their ages, their positions with Tesla and other biographical information as of June 10, 2022,April 6, 2023, are set forth below. Except for Messrs. Elon Musk and Kimbal Musk who are brothers, there are no other family relationships among any of our directors or executive officers.
Name | Age | Position | ||||
Elon Musk |
| 51 | Technoking of Tesla and Chief Executive Officer | |||
Zachary Kirkhorn |
| 38 | Master of Coin and Chief Financial Officer | |||
Andrew Baglino |
| 42 | Senior Vice President, Powertrain and Energy Engineering | |||
Tom Zhu | 43 | Senior Vice President, Automotive |
Elon Musk.For a brief biography of Mr. Musk, please see “Proposal“Proposal One—Election of Directors— Information Regarding the Board and Director Nominees”Nominees” above.
Zachary Kirkhorn is our Master of Coin and has served as our Chief Financial Officer since March 2019. Previously, Mr. Kirkhorn served in various finance positions continuously since joiningwith Tesla infrom March 2010 other than betweento August 2011, and from June 2013 during which he attended business school, including most recently as Vice President, Finance, Financial Planning and Business Operations from December 2018 to March 2019.his present role. Mr. Kirkhorn holds dual B.S.E. degrees in economics and mechanical engineering and applied mechanics from the University of Pennsylvania and an M.B.A. from Harvard University.
Andrew Baglino has served as our Senior Vice President, Powertrain and Energy Engineering since October 2019. Previously, Mr. Baglino served in various engineering positions continuously since joining Tesla in March 2006. Mr. Baglino holds a B.S. in electrical engineering from Stanford University.
Tom Zhu has served as our Senior Vice President, Automotive since April 2023. Mr. Zhu joined Tesla in April 2014, and served in various operational roles before being appointed as Vice President, Greater China, where he led the construction and operations of Gigafactory Shanghai. Mr. Zhu holds a bachelor’s degree of commerce in information technology from the Auckland University of Technology and an M.B.A. from Duke University.
Tesla, Inc. 2023 Proxy Statement 39 |
|
| |
Name | Position | |
Elon Musk | Technoking of Tesla and Chief Executive Officer | |
Zachary Kirkhorn | Master of Coin and Chief Financial Officer | |
Andrew Baglino | Senior Vice President, Powertrain and Energy Engineering | |
|
|
Mr. Guillen departed Tesla in June 2021.
40 Tesla, Inc. 2023 Proxy Statement |
in 2022.
Tesla, Inc. 2023 Proxy Statement 41 |
again hold a the Future Non-Binding Vote on Executive Compensation. triennial stockholder on the compensation of our named executive officers until they consider the results of our next say-on-pay frequency vote, which will be held at the 2023 annual meetingAnnual Meeting. See “stockholders.
$5.52$12.56 billion and an operating margin of 12.1%16.8%, representing favorable changes of $4.80$7.04 billion and 5.8%4.6%, respectively, compared to the prior year;
936,2221,313,851 and 930,4221,369,611 total vehicles, representing an increase of 87.38%40.3% and 82.53%47.2%, respectively, compared to the prior year;
3.99345348 megawatts of solar energy systems deployed; and
the commencement of builds of the Model Y inproduction and ramp at Gigafactory Texas and equipment testing through the vehicle production processGigafactory Berlin-Brandenburg and our Megafactory in Gigafactory Berlin.Lathrop, CA.
42 Tesla, Inc. 2023 Proxy Statement |
Name |
2022 Fiscal Year-End Base Salary($)(1) | |||||
|
|
| ||||
Elon Musk |
| — | (2) | |||
|
| |||||
Zachary Kirkhorn |
|
300,000 | ||||
Andrew Baglino | 300,000 |
| (1) | Reflects an annualized rate assuming 52 weeks each consisting of five work days. |
(2) |
|
|
|
Tesla, Inc. 2023 Proxy Statement 43 |
will provideprovides a company match equal to 50% of the employee’s contribution, up to a maximum of 3% of the employee’s eligible compensation with a $3,000 annual cap;
awareness.
44 Tesla, Inc. 2023 Proxy Statement |
Award.
Total Revenue* (in billions) |
| Adjusted EBITDA** (in billions) |
$20.0 |
| $1.5 |
$35.0 |
| $3.0 |
$55.0 |
| $4.5 |
$75.0 |
| $6.0 |
$100.0 |
| $8.0 |
$125.0 |
| $10.0 |
$150.0 |
| $12.0 |
$175.0 |
| $14.0 |
Total Revenue* (in billions) | Adjusted EBITDA** (in billions) | |||
$20.0 | $ | 1.5 | ||
$35.0 | $ | 3.0 | ||
$55.0 | $ | 4.5 | ||
$75.0 | $ | 6.0 | ||
$100.0 | $ | 8.0 | ||
$125.0 | $ | 10.0 | ||
$150.0 | $ | 12.0 | ||
$175.0 | $ | 14.0 |
| * | “Revenue” means total revenues as reported in Tesla’s financial statements on Forms 10-Q or10-K filed with the SEC for the previous four consecutive fiscal quarters. |
** | “Adjusted EBITDA” means (i) net income (loss) attributable to common stockholders before (ii) interest expense, (iii) (benefit) provision for income taxes, (iv) depreciation and amortization and (v) stock-based compensation, as each such item is reported in Tesla’s financial statements on Forms 10-Q or10-K filed with the SEC for the previous four consecutive fiscal quarters. |
Tesla, Inc. 2023 Proxy Statement 45 |
46 Tesla, Inc. 2023 Proxy Statement |
20212022 Option Exercises and Stock Vestedtargets, including milestones that have not yet been achieved under each of the 2012 CEO Performance Award and the 2018 CEO Performance Award;targets; (ii) the fact that Mr. Musk does not receive any cash if he does not actually sell shares and thereby reduce his investment in us, and he does not receive any cash to the extent that he sells only shares sufficient to cover income taxes with respect to his awards (including stock options exercised solely to avoid their expiration in accordance with their terms); and (iii) the then-current market value of our common stock at the times at which Mr. Musk may elect to actually sell his shares.
Year |
| “Total Compensation” of CEO, as Reported in Summary Compensation Table Below ($) |
|
| “Value Realized on Exercise or Vesting of Awards” of CEO, as Reported in Option Exercises and Stock Vested Table Below ($) |
|
| Median Annual Total Compensation of all Qualifying Non-CEO Employees, as reported in Pay Ratio Disclosure Section Below ($) |
| Total CEO Realized Compensation ($)(1)(2) |
| Ratio of Total CEO Realized Compensation to Median Annual Total Compensation of all Qualifying Non-CEO Employees |
2021 |
| — |
|
| 23,452,910,177 | (3) |
| 40,723 |
| 734,762,107 |
| 18,043:1 |
2020 |
| — |
|
| — |
|
| 46,150 |
| — |
| 0.00:1 |
2019 |
| 23,760 | (4) |
| 30,483,250 | (5) |
| 58,455 |
| 23,760 |
| 0.41:1 |
Year | “Total Compensation” of CEO, as Reported in Summary Compensation Table Below ($) | “Value Realized on Exercise or Vesting of Awards” of CEO, as Reported in Option Exercises and Stock Vested Table Below ($) | Median Annual Total Compensation of all Qualifying Non-CEO Employees, as reported in Pay Ratio Disclosure Section Below ($) | Total CEO Realized Compensation ($)(1) | Ratio of Total CEO Realized Compensation to Median Annual Total Compensation of all Qualifying Non-CEO Employees | |||||||||||||
2022 | — | — | 34,084 | — | 0.00:1 | |||||||||||||
2021 | — | 23,452,910,177 | (2) | 40,723 | 734,762,107 | 18,043:1 | ||||||||||||
2020 | — | — | 46,150 | — | 0.00:1 |
(1) | “Total CEO realized compensation” for a given year is defined as (i) the amounts reported for Mr. Musk in “ Executive Compensation—Summary Compensation Table “Non-Equity Incentive Plan Compensation” and “All Other Compensation,”plus (ii) with respect to any stock option exercised by Mr. Musk in such year in connection with which shares of stock were also sold other than to satisfy any resulting tax liability, the difference between the market price of such shares at the time of exercise and the applicable exercise price of the option,plus (iii) with respect to any restricted stock unit vested by Mr. Musk in such year in connection with which shares of stock were also sold other than automatic sales to satisfy any withholding obligations related to such vesting, the market price of such shares at the time of vesting,plus (iv) any cash actually received by Mr. Musk in respect of any shares sold to cover tax liabilities as described in (ii) and (iii) above, following the payment of such tax liabilities. |
(2) |
|
| Reflects the exercise of vested stock options scheduled to expire in 2022 as to which Mr. Musk paid the exercise price in cash. Of the shares received upon exercise, 42.0% were immediately sold in order to pay federal and state tax withholding from the option 10b5-1 trading plan put in place in September 2021. |
|
| |
Tesla, Inc. 2023 Proxy Statement 47 |
|
|
officers and reserves the right to pay compensation that may not be deductible to Tesla iofficers.
Ira Ehrenpreis (Chair) |
Robyn Denholm |
Kathleen Wilson-Thompson |
48 Tesla, Inc. 2023 Proxy Statement |
Name and Principal Position |
| Year |
| Salary ($) |
| Bonus ($) |
| Stock Awards ($)(1) |
| Option Awards ($)(2) |
| Non-Equity Incentive Plan Compensation ($) |
| All Other Compensation ($) |
| Total ($) |
Elon Musk |
| 2021 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Technoking of Tesla and Chief Executive Officer |
| 2020 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 2019 |
| 23,760 | (3) | — |
| — |
| — |
| — |
| — |
| 23,760 | |
Zachary Kirkhorn |
| 2021 |
| 301,154 |
| — |
| — |
| — |
| — |
| — |
| 301,154 |
Master of Coin and Chief Financial Officer |
| 2020 |
| 269,663 | (4) | — |
| — |
| 46,261,354 |
| — |
| 31,099 | (5) | 46,562,116 |
|
| 2019 |
| 276,058 |
| — |
| 5,019,998 |
| 15,947,901 |
| — |
| — |
| 21,243,957 |
Andrew Baglino |
| 2021 |
| 301,154 |
| — |
| — |
| — |
| — |
| — |
| 301,154 |
SVP, Powertrain and Energy Engineering
|
| 2020 |
| 283,269 | (4) | — |
| — |
| 46,261,354 |
| — |
| — |
| 46,544,623 |
| 2019 |
| 301,154 |
| — |
| — |
| 4,779,080 |
| — |
| — |
| 5,080,234 | |
Jerome Guillen(6) |
| 2021 |
| 161,538 |
| — |
| — |
| — |
| — |
| — |
| 161,538 |
Former President, Tesla Heavy Trucking |
| 2020 |
| 283,269 | (4) | — |
| — |
| 46,261,354 |
| — |
| — |
| 46,544,623 |
|
| 2019 |
| 301,154 |
| — |
| — |
| 7,965,058 |
| — |
| — |
| 8,266,212 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||
Elon Musk | 2022 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Technoking of Tesla and Chief Executive Officer | 2021 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2020 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Zachary Kirkhorn | 2022 | 300,000 | — | — | — | — | 3,000 | (2) | 303,000 | |||||||||||||||||||||||
Master of Coin and Chief Financial Officer | 2021 | 301,154 | — | — | — | — | — | 301,154 | ||||||||||||||||||||||||
2020 | 269,663 | (3) | — | — | 46,261,354 | — | 31,099 | (4) | 46,562,116 | |||||||||||||||||||||||
Andrew Baglino | 2022 | 300,000 | — | — | — | — | 3,000 | (2) | 303,000 | |||||||||||||||||||||||
SVP, Powertrain and Energy Engineering | 2021 | 301,154 | — | — | — | — | — | 301,154 | ||||||||||||||||||||||||
2020 | 283,269 | (3) | — | — | 46,261,354 | — | — | 46,544,623 |
(1) |
|
| This column reflects the aggregate grant date fair value computed in accordance with ASC Topic 718 of the options to purchase shares of our common stock granted to the named executive officers. The assumptions used in the valuation of these awards are set forth in the notes to our consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, |
| Reflects matching contributions made under the of the |
| Reflects a temporary reduction to base salary in response to global market conditions. |
| Reflects an amount corresponding to previously-accrued paid time off that was applied toward the purchase of a Tesla vehicle pursuant to a company-wide program. |
|
|
Tesla, Inc. 2023 Proxy Statement 49 |
as if he or she was a named executive officer to calculate the total annual compensation, including base salary or wages, performance-based commission payments, and equity awards based on their grant date fair values.2021.2022.
The following table presentsthe Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation
Value of Initial Fixed $100 Investment Based on: | ||||||||||||||||||||||||||||||||||||||||
Year | Summary Compensation Table Total for CEO ($)(1) | Compensation Actually Paid to CEO (in millions) ($)(2) | Average Summary Compensation Table Total for Non-CEO Named Executive Officers (in millions) ($)(3) | Average Compensation Actually Paid to Non-CEO Named Executive Officers (in millions) ($)(4) | Tesla Total Shareholder Return ($)(5) | Peer Group Total Shareholder Return ($)(6) | Net Income (in millions) ($)(7) | Revenue (in millions) ($)(8) | ||||||||||||||||||||||||||||||||
2022 | — | (9,703 | ) | 0.3 | (165.3 | ) | 441.68 | 151.29 | 12,587 | 81,462 | ||||||||||||||||||||||||||||||
2021 | — | 15,016 | 0.3 | (74.3 | )(9) | 1,263.09 | 235.13 | 5,644 | 53,823 | |||||||||||||||||||||||||||||||
2020 | — | 43,019 | 46.6 | 393.0 | 843.44 | 162.40 | 862 | 31,536 |
(1) | Represents the total compensation reported for Elon Musk (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. |
(2) | The dollar amounts reported in this column represent the amount of “compensation actually paid” to Mr. Musk, computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Musk during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Musk’s total compensation, as reported in the Summary Compensation Table for each year, to determine the compensation actually paid. |
Year | Reported Summary Compensation Table Total for CEO ($) | Reported Value of Equity Awards ($) (a) | Equity Award Adjustments (in millions) ($) (b) | Reported Change in the Actuarial Present Value of Pension Benefits ($) | Pension Benefit Adjustments ($) | Compensation Actually Paid to CEO (in millions) ($) | ||||||||||||||||||||||||
2022 | — | — | (9,703 | ) | — | — | (9,703 | ) | ||||||||||||||||||||||
2021 | — | — | 15,016 | — | — | 15,016 | ||||||||||||||||||||||||
2020 | — | — | 43,019 | — | — | 43,019 |
(a) | The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. |
(b) | The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that |
50 |
are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: |
Year | Year End Fair Value of Equity Awards Granted and Unvested in the Year ($) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards (in millions) ($) | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) | Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year (Vesting Date Compared to the Value at the End of the Prior Year) (in millions) ($) | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation ($) | Total Equity Award Adjustments (in millions) ($) | |||||||||||||||||||||
2022 | — | (4,973 | ) | — | (4,730 | ) | — | — | (9,703 | ) | ||||||||||||||||||
2021 | — | 13,028 | — | 1,988 | — | — | 15,016 | |||||||||||||||||||||
2020 | — | 36,329 | — | 6,690 | — | — | 43,019 |
(3) | Represents the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Elon Musk, who has served as our CEO since 2008) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Musk) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Zachary Kirkhorn and Andrew Baglino; (ii) for 2021, Zachary Kirkhorn, Andrew Baglino and Jerome Guillen; and (iii) for 2020, Zachary Kirkhorn, Andrew Baglino and Jerome Guillen. |
| The dollar amounts reported in this column is the average compensation actually paid for our NEOs other than our CEO in each applicable year, computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the NEO’s total compensation, as reported in the Summary Compensation Table for each applicable year, to determine the compensation actually paid. |
Year | Average Reported Summary Compensation Table Total for Non-CEO NEOs (in millions) ($) | Average Reported Value of Equity Awards (in millions) ($) | Average Equity Award Adjustments (in millions) ($) (a) | Average Reported Change in the Actuarial Present Value of Pension Benefits ($) | Average Pension Benefit Adjustments ($) | Average Compensation Actually Paid to Non-CEO NEOs (in millions) ($) | ||||||||||||||||||||||||
2022 | 0.3 | — | (165.6 | ) | — | — | (165.3 | ) | ||||||||||||||||||||||
2021 | 0.3 | — | (74.6 | ) | — | — | (74.3 | ) | ||||||||||||||||||||||
2020 | 46.6 | 46.3 | 392.7 | — | — | 393.0 |
| The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
Year | Average Year End Fair Value of Equity Awards Granted and Unvested in the Year ($) | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards (in millions) ($) | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year (in millions) ($) | Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year (Vesting Date Compared to the Value at the End of the Prior Year) (in millions) ($) | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year (in millions) ($) | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation ($) | Total Average Equity Award Adjustments (in millions) ($) | |||||||||||||||||||||
2022 | — | (110.5 | ) | — | (55.1 | ) | — | — | (165.6 | ) | ||||||||||||||||||
2021 | — | 78.7 | — | (2.9 | ) | (150.4 | ) | — | (74.6 | ) | ||||||||||||||||||
2020 | 84.2 | 278.7 | 0.7 | 29.1 | — | — | 392.7 |
|
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| ||||||
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|
|
| ||||||
|
|
|
|
| ||||||
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|
|
|
| Tesla, Inc. 2023 Proxy Statement 51 |
| Total shareholder return is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
(6) | Represents the weighted group total shareholder return (“TSR”), weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the group of all public companies with SIC code 3711. |
(7) | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
(8) | In the Company’s assessment, revenue is the financial performance measure that is the most important financial performance measure (other than total shareholder return and net income) used by the Company for the most recently completed fiscal year, to link compensation actually paid to performance. |
(9) | Mr. Guillen departed Tesla in June |
5 Tesla, Inc. 2023 Proxy Statement2 |
Tesla, Inc. 2023 Proxy Statement 53 |
54 Tesla, Inc. 2023 Proxy Statement |
|
| Option Awards |
|
| Stock Awards |
| |||||||||||||||||||||||||||||||
Name |
| Grant Date |
|
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
|
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
|
| Option Exercise Price ($) |
|
| Option Expiration Date |
|
| Number of Shares or Units of Stock That Have Not Vested (#) |
|
| Market Value of Shares or Units of Stock That Have Not Vested ($)(1) |
| |||||||||||||
Elon Musk |
|
| 3/21/2018 | (2) |
|
| 59,103,455 |
|
|
| 42,216,755 |
|
|
| — |
|
|
| 70.01 |
|
|
| 1/19/2028 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 6/10/2013 | (3) |
|
| 1,750 |
|
|
| — |
|
|
| — |
|
|
| 20.01 |
|
|
| 6/10/2023 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 4/8/2013 | (3) |
|
| 1,750 |
|
|
| — |
|
|
| — |
|
|
| 8.37 |
|
|
| 4/8/2023 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 8/13/2012 | (4) |
|
| — |
|
|
| 2,637,455 |
|
|
| — |
|
|
| 6.24 |
|
|
| 8/13/2022 |
|
|
| — |
|
|
| — |
| |||||
Zachary J. Kirkhorn |
|
| 10/19/2020 | (5) |
|
| 55,645 |
|
|
| 149,814 |
|
|
| — |
|
|
| 430.83 |
|
|
| 10/19/2030 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 4/19/2019 | (6) |
|
| 445,530 |
|
|
| 202,515 |
|
|
| — |
|
|
| 54.66 |
|
|
| 4/19/2029 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 4/19/2019 | (7) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 27,000 |
|
|
| 28,533,060 |
| |||||
|
|
| 1/22/2019 | (8) |
|
| 32,656 |
|
|
| 21,774 |
|
|
| — |
|
|
| 59.79 |
|
|
| 1/22/2029 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 1/22/2019 | (9) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 7,260 |
|
|
| 7,672,223 |
| |||||
|
|
| 10/16/2018 | (10) |
|
| 4,858 |
|
|
| 4,867 |
|
|
| — |
|
|
| 55.32 |
|
|
| 10/16/2028 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 10/16/2018 | (9) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,726 |
|
|
| 1,824,002 |
| |||||
Andrew Baglino |
|
| 10/19/2020 | (5) |
|
| 55,645 |
|
|
| 149,814 |
|
|
| — |
|
|
| 430.83 |
|
|
| 10/19/2030 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 7/19/2019 | (11) |
|
| 81,176 |
|
|
| 105,954 |
|
|
| — |
|
|
| 51.64 |
|
|
| 7/19/2029 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 10/16/2018 | (10) |
|
| 32,741 |
|
|
| 18,959 |
|
|
| — |
|
|
| 55.32 |
|
|
| 10/16/2028 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 10/16/2018 | (9) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,895 |
|
|
| 7,286,498 |
| |||||
|
|
| 3/19/2018 | (12) |
|
| 48,046 |
|
|
| 18,454 |
|
|
| — |
|
|
| 62.72 |
|
|
| 3/19/2028 |
|
|
| — |
|
|
| — |
| |||||
|
|
| 2/20/2018 | (13) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 924 |
|
|
| 976,465 |
| |||||
|
|
| 11/10/2014 | (14) |
|
| — |
|
|
| 12,500 |
|
|
| — |
|
|
| 48.39 |
|
|
| 11/10/2024 |
|
|
| — |
|
|
| — |
| |||||
Jerome Guillen(15) |
|
| — |
|
|
| — |
|
|
|
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | ||||||||||||||||||||||||
Elon Musk | 3/21/2018 | (2) | 278,630,565 | 25,330,065 | — | 23.34 | 1/19/2028 | — | — | |||||||||||||||||||||||
6/10/2013 | (3) | 5,250 | — | — | 6.67 | 6/10/2023 | — | — | ||||||||||||||||||||||||
4/8/2013 | (3) | 5,250 | — | — | 2.79 | 4/8/2023 | — | — | ||||||||||||||||||||||||
Zachary J. Kirkhorn | 10/19/2020 | (4) | 321,027 | 295,350 | — | 143.61 | 10/19/2030 | — | — | |||||||||||||||||||||||
4/19/2019 | (5) | 1,822,626 | 121,509 | — | 18.22 | 4/19/2029 | — | — | ||||||||||||||||||||||||
4/19/2019 | (6) | — | — | — | — | — | 27,000 | 3,325,860 | ||||||||||||||||||||||||
1/22/2019 | (7) | 130,629 | 32,661 | — | 19.93 | 1/22/2029 | — | — | ||||||||||||||||||||||||
1/22/2019 | (8) | — | — | — | — | — | 10,890 | 1,341,430 | ||||||||||||||||||||||||
10/16/2018 | (9) | 8,694 | 7,131 | — | 18.44 | 10/16/2028 | — | — | ||||||||||||||||||||||||
10/16/2018 | (8) | — | — | — | — | — | 2,589 | 318,913 | ||||||||||||||||||||||||
Andrew Baglino | 10/19/2020 | (4) | 321,027 | 295,350 | — | 143.61 | 10/19/2030 | — | — | |||||||||||||||||||||||
7/19/2019 | (10) | 368,349 | 193,041 | — | 17.22 | 7/19/2029 | — | — | ||||||||||||||||||||||||
10/16/2018 | (9) | 114,243 | 25,857 | — | 18.44 | 10/16/2028 | — | — | ||||||||||||||||||||||||
10/16/2018 | (8) | — | — | — | — | — | 10,334 | 1,274,174 | ||||||||||||||||||||||||
3/19/2018 | (11) | 62,184 | 11,316 | — | 20.91 | 3/19/2028 | — | — | ||||||||||||||||||||||||
11/10/2014 | (12) | — | 37,500 | — | 16.13 | 11/10/2024 | — | — |
(1) | The market value of unvested restricted stock units is calculated by multiplying the number of unvested restricted stock units held by the applicable named executive officer by the closing price of our common stock on December 31, |
(2) |
|
(3) | Stock option awards granted as part of our company-wide patent incentive program. The total number of shares subject to the option was vested and exercisable on the applicable grant date of the option. |
(4) |
|
| 1/48th of the shares subject to the option became vested and exercisable on December 5, 2020, and 1/48th of the shares subject to the option become vested and exercisable every month thereafter, subject to the grantee’s continued service to us on each such vesting date. |
| 1/8th of the shares subject to the option became vested and exercisable on September 13, 2019, and 1/48th of the shares subject to the option become vested and exercisable each month thereafter, subject to the grantee’s continued service to us on each such vesting date. |
| 1/8th of this award became vested on December 5, 2019, and 1/16th of this award becomes vested every three months thereafter, subject to the grantee’s continued service to us on each such vesting date. |
| ||
Tesla, Inc. 2023 Proxy Statement 55 |
(7) | 1/60th of the shares subject to the option became vested and exercisable on January 5, 2019, and 1/60th of the shares subject to the option become vested and exercisable each month thereafter, subject to the grantee’s continued service to us on each such vesting date. |
| 1/20th of this award vested on March 5, 2019, and 1/20th of this award vests every three months thereafter, subject to the grantee’s continued service to us on each such vesting date. |
| 1/60th of the shares subject to the option became vested and exercisable on November 1, 2018, and 1/60th of the shares subject to the option become vested and exercisable each month thereafter, subject to the grantee’s continued service to us on each such vesting date. |
| 1/60th of the shares subject to the option became vested and exercisable on July 24, 2019, and 1/60th of the shares subject to the option become vested and exercisable each month thereafter, subject to the grantee’s continued service to us on each such vesting date. |
| 1/60th of this award vested on March 27, 2018, and 1/60th of this award vests every three months thereafter, subject to the grantee’s continued service to us on each such vesting date. |
| 1/ 12-month period and (iii) completion of the first Model 3 production vehicle. 1/4th of the shares subject to this |
(14) 1/4th of the shares subject to the option became vested and exercisable upon each of the following, as determined by the Board: (i) the completion of the first Model X production vehicle; (ii) aggregate vehicle production of 100,000 vehicles in a trailing 12-month period and (iii) completion of the first Model 3 production vehicle. 1/4th of the shares subject to this option will become vested and exercisable upon the determination by the Board that annualized gross margin of greater than 30% in any three years is achieved, subject to the grantee’s continued service to us on each such vesting date.
|
|
|
| Option Awards |
|
| Stock Awards |
| ||||||||||
Name |
| Number of Shares Acquired on Exercise (#) |
|
| Value Realized on Exercise ($)(1) |
|
| Number of Shares Acquired on Vesting (#) |
|
| Value Realized on Vesting ($)(2) |
| ||||
Elon Musk |
|
| 22,862,050 |
|
|
| $23,452,910,176 |
|
|
| — |
|
|
| — |
|
Zachary Kirkhorn |
|
| 3,200 |
|
|
| 3,204,672 |
|
|
| 24,149 |
|
|
| 17,597,044 |
|
Andrew Baglino |
|
| 27,500 |
|
|
| 20,060,191 |
|
|
| 7,141 |
|
|
| 5,258,669 |
|
Jerome Guillen(3) |
|
| 50,000 |
|
|
| 33,996,790 |
|
|
| 1,211 |
|
|
| 724,117 |
|
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||
Elon Musk | — | — | — | — | ||||||||||||
Zachary Kirkhorn | 13,350 | 1,258,505 | 67,479 | 16,306,323 | ||||||||||||
Andrew Baglino | 141,000 | 33,866,369 | 13,113 | 3,273,677 |
(1) | Reflects the product of the number of shares of stock subject to the exercised option multiplied by the difference between the market price of our common stock at the time of exercise on the exercise date and the exercise price of the option. |
(2) | Reflects the product of the number of shares of stock vested multiplied by the market price of our common stock on the vesting date. |
|
|
56 Tesla, Inc. 2023 Proxy Statement |
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Name |
| Fees Earned or Paid in Cash ($)(1) |
|
| Option Awards ($)(2)(3) |
| All Other Compensation |
|
| Total ($) | ||||||||
Robyn Denholm |
|
| — |
|
|
| — |
|
| — |
|
|
| — |
| |||
Ira Ehrenpreis |
|
| — |
|
|
| — |
|
| — |
|
|
| — |
| |||
Lawrence J. Ellison |
|
| — |
|
|
| — |
|
| — |
|
|
| — |
| |||
Antonio Gracias(4) |
|
| — |
|
|
| — |
|
| — |
|
|
| — |
| |||
Hiromichi Mizuno |
|
| 27,500 |
|
|
| — |
|
| 10,949 | (5) |
|
| 38,449 |
| |||
James Murdoch |
|
| — |
|
|
| — |
|
| — |
|
|
| — |
| |||
Kimbal Musk |
|
| — |
|
|
| — |
|
| — |
|
|
| — |
| |||
Kathleen Wilson-Thompson |
|
| — |
|
|
| — |
|
| — |
|
|
| — |
|
Name | Fees Earned or Paid in Cash ($)(1) | Option Awards ($)(2)(3) | All Other Compensation | Total ($) | ||||||||||||
Robyn Denholm | — | — | — | — | ||||||||||||
Ira Ehrenpreis | — | — | — | — | ||||||||||||
Lawrence J. Ellison(4) | — | — | — | — | ||||||||||||
Joe Gebbia | — | — | — | — | ||||||||||||
Hiromichi Mizuno | 27,500 | — | — | 27,500 | ||||||||||||
James Murdoch | — | — | — | — | ||||||||||||
Kimbal Musk | — | — | — | — | ||||||||||||
Kathleen Wilson-Thompson | — | — | — | — |
(1) | Reflects cash compensation for service on the Board and/or its applicable committees pursuant to Tesla’s outside director compensation policy (the “ Director Compensation Policy ”) and/or for service as Chair of the Board as previously approved by the Board, as applicable. The earning and payment of cash retainer payments payable to outside directors may be waived in whole or part at the election of the director. |
(2) |
|
| ||||
Name | Aggregate Number of Shares Underlying Options Outstanding | |||
Robyn Denholm |
1,662,480 | |||
Ira Ehrenpreis |
1,110,000 | |||
Joe Gebbia |
— | |||
Hiromichi Mizuno |
351,690 | |||
James Murdoch |
1,270,020 | |||
Kimbal Musk |
441,750 | |||
Kathleen Wilson-Thompson |
765,855 |
(3) |
|
(4) | Board term ended in re-election at the |
|
| |
Tesla, Inc. 2023 Proxy Statement 57 |
58 Tesla, Inc. 2023 Proxy Statement |
|
| (a) |
|
| (b) |
|
| (c) |
| |||
Plan category |
| Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)(1) |
|
| Weighted-average exercise price of outstanding options, warrants and rights ($)(2) |
|
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#) |
| |||
Equity compensation plans approved by security holders |
|
| 130,375,672 |
|
|
| 84.46 |
|
|
| 82,835,318 | (3) |
Equity compensation plans not approved by security holders |
|
| 102,177 | (4) |
|
| 85.62 |
|
|
| — |
|
Total |
|
| 130,477,849 |
|
|
| 84.46 |
|
|
| 82,835,318 |
|
(a) | (b) | (c) | ||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)(1) | Weighted-average exercise price of outstanding options, warrants and rights ($)(2) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#) | |||||||||
Equity compensation plans approved by security holders | 364,705,998 | 30.65 | 247,886,582 | (3) | ||||||||
Equity compensation plans not approved by security holders | 190,915 | (4) | 33.00 | — | ||||||||
Total | 364,896,913 | 30.65 | 247,886,582 |
(1) | Consists of options to purchase shares of our common stock, including the 2018 CEO Performance Award, and restricted stock unit awards representing the right to acquire shares of our common stock. |
(2) |
|
(3) | Consists of |
(4) | Consists of outstanding stock options and restricted stock unit awards that were assumed in connection with acquisitions. No additional awards may be granted under the |
Tesla, Inc. 2023 Proxy Statement 59 |
CERTAIN RELATIONSHIPS AND RELATEDRELATED PARTY TRANSACTIONS
Review of Related Party Transactions
In accordance with the charter for the Audit Committee of the Board, our Audit Committee reviews and approves in advance any proposed related person transactions.
For purposes of these procedures, “related person” and “transaction” have the meanings contained in Item 404 of Regulation S-K.
The individuals and entities that are considered “related persons” include:
Directors and executive officers of Tesla;
Any person known to be the beneficial owner of five percent or more of Tesla’s common stock (a “5% Stockholder”); and
• | Any person known to be the beneficial owner of five percent or more of Tesla’s common stock (a “5% Stockholder”); and |
Any immediate family member, as defined in Item 404(a) of Regulation S-K, of a director, executive officer or 5% Stockholder.
• | Any immediate family member, as defined in Item 404(a) of Regulation S-K, of a director, executive officer or 5% Stockholder. |
In accordance with our Related Person Transactions Policy and Procedures, the Audit Committee must review and approve all transactions in which (i) Tesla or one of its subsidiaries is a participant, (ii) the amount involved exceeds $120,000 and (iii) a related person has a direct or indirect material interest, other than transactions available to all Tesla employees generally.
In assessing a related party transaction brought before it for approval the Audit Committee considers, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction. The Audit Committee may then approve or disapprove the transaction in its discretion.
Any related person transaction will be disclosed in the applicable SEC filing as required by the rules of the SEC.
SpaceX
Elon Musk is the Chief Executive Officer, Chief Technical Officer and a significant stockholder of SpaceX. Kimbal Musk and Antonio Gracias, who are or were members of the Board in 2021, are also members of the board of directors of SpaceX. In addition, certainCertain members of the Board, and/or investment funds affiliated with them, have made minority investments in SpaceX.
SpaceX has purchased and may purchase in the futureis party to certain vehicle components from Tesla, including with modifications for non-vehicle applications. The prices for such components and any associated laborcommercial, licensing and support which were negotiated in good faith and were consistentagreements with prices offered to other third parties to whom any such components have been sold, were $2.8 million in the aggregate in 2021 and $0.2Tesla. Under these agreements, SpaceX incurred expenses of approximately $0.5 million in the aggregate in 2022 through March.
SpaceX purchased solar modules from Tesla for an aggregate $0.04 million in 2021. The prices were negotiated in good faith.
SpaceX purchased refurbished power supplies and related services from Tesla for an aggregate $0.1 million in 2021. The prices were negotiated in good faith.
Tesla has provided SpaceX certain engineering support and resources from time to time upon the mutual agreement of the parties and at costs per hour that were negotiated in good faith. SpaceX incurred an aggregate $0.01 million in 2021 for such support and resources.
In 2020, Tesla granted to SpaceX a limited non-perpetual license to certain software, as to which Tesla retains all intellectual property rights. Such license was renewed in 2022 and will expire no later than 2023. SpaceX incurred an aggregate $0.1 million in 2021 and is expected to incur an aggregate $0.03 million in 2022 for the license. The aggregate fees for the license2023 through its expected term were negotiated in good faith.February.
In 2022, Tesla purchased back from SpaceX a transformer in exchange for an aggregate $0.05 million in design services which Tesla provided.
Since April 2016, SpaceX has invoiced Tesla for our use of an aircraft owned and operated by SpaceX at rates determined by Tesla and SpaceX, subject to rules of the Federal Aviation Administration governing such arrangements. Tesla incurred expenses of approximately $0.8 million in 2022 and $0.1 million in 2023 through February.
Elon Musk is the Chief Executive Officer and a significant stockholder of Twitter. Twitter is party to certain commercial and support agreements with Tesla. Under these agreements, Twitter incurred expenses of approximately $1.0 million in the aggregate in 2022 and $0.4 million in 2023 through February.
JB Straubel is the Chief Executive Officer of Redwood. Tesla is party to an agreement with Redwood to supply certain scrap materials. Under this agreement, Redwood incurred expenses of $0 in 2022 and approximately $0.5 million in 2021 and has incurred $0.1 million in 20222023 through March.February.
Other Transactions
Tesla periodically does business with certain entities its directors are affiliated with. Such transactions are done on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances.circumstances.
In the ordinary course of business, we enter into offer letters with our executive officers. We have also entered into indemnification agreements with each of our directors and officers. The indemnification agreements and our certificate of incorporation and bylaws require us to indemnify our directors and officers to the fullest extent permitted by Delaware law. In relation to our CEO’s exercise of stock options and sale of common stock from the 2012 CEO Performance Award, Tesla withheld the appropriate amount of taxes. However, given the significant amounts involved, our CEO entered into an indemnification agreement with us in November 2021 to indemnify the Company for additional taxes owed, if any.
60 Tesla, Inc. 2023 Proxy Statement |
DELINQUENT SECTION 16(a) REPORTS
Under Section 16 of the Exchange Act, Tesla’s directors, executive officers and any persons holding more than 10% of the Tesla’s common stock are required to report initial ownership of the Tesla common stock and any subsequent changes in ownership to the SEC. Specific due dates have been established by the SEC, and Tesla is required to disclose in this proxy statement any failure to file required ownership reports by these dates. Based solely upon a review of forms filed with the SEC and the written representations of such persons, Tesla is aware of no late Section 16(a) filings other than one late Form 4 report filed by Jerome Guillen, who departed Tesla in 2021,Andrew Baglino, reporting an exercise of options and subsequent sales pursuant to a 10b5-1 trading plan, due to an administrative delay by Tesla.
Tesla, Inc. 2023 Proxy Statement 61 |
OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding the beneficial ownership of Tesla’s common stock, as of
March 31, 2022,2023, for the following:
each person (or group of affiliated persons) who is known by us to beneficially own 5% of the outstanding shares of our common stock;
• | each of our non-employee directors; |
each of our non-employee directors;
each of our executive officers named in the Summary Compensation Table of this proxy statement; and
all current directors and executive officers of Tesla as a group.
In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options or other convertible securities held by that person or entity that are currently exercisable or exercisable within 60 days of March 31, 2022.2023. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Applicable percentage ownership is based on 1,035,976,2713,169,314,178 shares of Tesla’s common stock outstanding at March 31, 2022.2023.
Unless otherwise indicated, all persons named below can be reached at Tesla, Inc., 1 Tesla Road, Austin, Texas 78725.
Beneficial Owner Name |
| Shares Beneficially Owned |
|
| Percentage of Shares Beneficially Owned |
| ||
5% Stockholders |
|
|
|
|
|
|
|
|
Elon Musk(1) |
|
| 265,488,606 |
|
|
| 23.5 | % |
The Vanguard Group(2) |
|
| 62,448,572 |
|
|
| 6.0 | % |
Blackrock, Inc.(3) |
|
| 52,918,395 |
|
|
| 5.1 | % |
Named Executive Officers & Directors |
|
|
|
|
|
|
|
|
Elon Musk(1) |
|
| 265,488,606 |
|
|
| 23.5 | % |
Zachary J. Kirkhorn(4) |
|
| 692,486 |
|
|
| * |
|
Jerome Guillen(5) |
|
| 50,598 |
|
|
| * |
|
Andrew Baglino(6) |
|
| 276,405 |
|
|
| * |
|
Robyn Denholm(7) |
|
| 609,160 |
|
|
| * |
|
Ira Ehrenpreis(8) |
|
| 551,041 |
|
|
| * |
|
Lawrence J. Ellison(9) |
|
| 15,290,975 |
|
|
| 1.5 | % |
Hiromichi Mizuno(10) |
|
| 117,230 |
|
|
| * |
|
James Murdoch(11) |
|
| 475,765 |
|
|
| * |
|
Kimbal Musk(12) |
|
| 683,490 |
|
|
| * |
|
Kathleen Wilson-Thompson(13) |
|
| 285,140 |
|
|
| * |
|
All current executive officers and directors as a group (10 persons)(14) |
|
| 284,470,298 |
|
|
| 25.1 | % |
Beneficial Owner Name | Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||||||
5% Stockholders | ||||||||
Elon Musk(1) | 715,022,706 | 20.6 | % | |||||
The Vanguard Group(2) | 217,857,401 | 6.9 | % | |||||
Blackrock, Inc.(3) | 178,428,109 | 5.6 | % | |||||
Named Executive Officers & Directors | ||||||||
Elon Musk(1) | 715,022,706 | 20.6 | % | |||||
Zachary J. Kirkhorn(4) | 2,688,930 | * | ||||||
Andrew Baglino(5) | 1,040,304 | * | ||||||
Robyn Denholm(6) | 1,677,480 | * | ||||||
Ira Ehrenpreis(7) | 1,681,005 | * | ||||||
Joe Gebbia | 111 | * | ||||||
Hiromichi Mizuno(8) | 351,690 | * | ||||||
James Murdoch(9) | 1,427,295 | * | ||||||
Kimbal Musk(10) | 2,050,470 | * | ||||||
JB Straubel | 12,660 | * | ||||||
Kathleen Wilson-Thompson(11) | 771,255 | * | ||||||
All current executive officers and directors as a group (11 persons)(12) | 728,328,172 | 20.9 | % |
* | Represents beneficial ownership of less than 1%. |
(1) | Includes (i) |
(2) | Includes shares beneficially owned by The Vanguard Group, of which The Vanguard Group has shared voting power over |
62 Tesla, Inc. 2023 Proxy Statement |
(3) | Includes shares beneficially owned by BlackRock, Inc., of which Blackrock, Inc. has sole voting power over |
(4) | Includes |
(5) |
|
| Includes |
| Includes |
| Includes |
| Includes |
| Includes |
| Includes |
| Includes |
| Includes |
|
|
Tesla, Inc. 2023 Proxy Statement 63 |
The Audit Committee assists the Board in fulfilling its responsibilities for oversight of the integrity of Tesla’s consolidated financial statements, our internal accounting and financial controls, our compliance with legal and regulatory requirements, the organization and performance of our internal audit function and the qualifications, independence and performance of our independent registered public accounting firm.
The management of Tesla is responsible for establishing and maintaining internal controls and for preparing Tesla’s consolidated financial statements. The independent registered public accounting firm is responsible for auditing the financial statements. It is the responsibility of the Audit Committee to oversee these activities.
The Audit Committee has:
Reviewed and discussed the audited financial statements with Tesla management and with PricewaterhouseCoopers LLP, Tesla’s independent registered public accounting firm;
Discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and
Received the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding PricewaterhouseCoopers LLP’s communications with the Audit Committee concerning independence and has discussed with PricewaterhouseCoopers LLP their independence.
Based upon these discussions and review, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in Tesla’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with the United States Securities and Exchange Commission.AUDIT RELATED MATTERS
Members Robyn Denholm (Chair) Joe Gebbia Hiromichi Mizuno(1) James Murdoch | Composition Our Audit Committee is composed of four directors: Robyn Denholm (chair), Joe Gebbia, Hiromichi Mizuno and James Murdoch. The Audit Committee is comprised solely of directors who satisfy applicable independence and other requirements under Nasdaq listing standards and applicable securities laws. The Board has determined that Ms. Denholm is an “audit committee financial expert” as defined in the rules of the SEC. Oversight The Audit Committee assists the Board in fulfilling its responsibilities by: • Providing oversight, recommendations, and under specified thresholds, approvals, regarding significant financial matters and investment practices, including any material acquisitions and divestitures; • Monitoring the integrity of Tesla’s financial statements and Tesla’s compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; and • Reviewing the adequacy and effectiveness of Tesla’s internal control policies and procedures in addition to Tesla’s risk management, data privacy and data security. In addition to overseeing key risks in the areas of data security and privacy, crisis risk management, ethics and compliance, and ESG, as discussed below, the Audit Committee is also responsible for overseeing risks in other areas of our business and operation. Additional Key Objectives Data Security The Audit Committee is responsible for reviewing the adequacy and effectiveness of Tesla’s policies and practices with respect to data security risk exposures, and providing oversight over Tesla’s data security policies and monitoring programs. The Audit Committee receives regular updates from senior management, including our Chief Information Officer, on data security risk reviews of Tesla’s key business segments and products, procedures to assess and address data security risk, and the effectiveness of data security technologies and solutions deployed internally. Data Privacy Privacy is integral to our business and Tesla is committed to the protection of the personal data which it processes as part of its business and on behalf of customers. We have established a robust global privacy program with oversight by executive management, an independent Data Protection Officer for our European regulated entities, and, at the Board level, our Audit Committee. Our governance and accountability measures promote core principles of data privacy, while the collaborative effort between our Information Security Team and Legal Team enables us to meet our regulatory requirements and demonstrate compliance. (1) Will not stand for re-election at the 2023 Annual Meeting. | |||||
64 Tesla, Inc. 2023 Proxy Statement |
Crisis Risk Management In response to extraordinary events such as the COVID-19 pandemic and ensuing supply chain shortages, the Audit Committee receives regular updates from senior management. Ethics The Audit Committee has oversight of Tesla’s compliance with legal, regulatory and ethical compliance programs. The Audit Committee has established procedures for the receipt, retention, and treatment of complaints about accounting, internal accounting controls or audit matters, and procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or audit matters. We encourage employees and third parties to report concerns about our accounting controls, auditing matters or any other ethical wrongdoing. To report such a concern, please visit https://tesla-cdn.thron.com/static/XT8QBQ_business-code-of-ethics_SHJXZD.pdf?xseo=&response-content- Environmental, Social & Governance The Audit Committee is responsible for reviewing and discussing the assessment of the Company’s annual Impact Report, and, as deemed appropriate, other ESG-related disclosures. Selection & Oversight of External Auditor The Audit Committee appoints, compensates, oversees and manages Tesla’s relationship with its independent registered public accounting firm, which reports directly to the Audit Committee. In selecting PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm, the Audit Committee annually evaluates the firm’s qualifications and performance; the quality and candor of their communications with the Audit Committee and the Company; independence and integrity; efficiency and the appropriateness of fees; benefits of audit firm or lead partner rotations and the comprehensiveness of evaluations of internal controls. The Audit Committee also considers the relative costs, benefits, challenges and other potential impacts of selecting a different independent public accounting firm. In reviewing and approving audit and non-audit service fees, the Audit Committee considers a number of factors, including the scope and quality of work, as well as an assessment of the impact on auditor independence of non-audit fees and services. During the course of the fiscal year, the Audit Committee is given regular updates regarding audit related and non-audit related fees. Audit Committee Report The Audit Committee assists the Board in fulfilling its responsibilities for oversight of the integrity of Tesla’s consolidated financial statements, our internal accounting and financial controls, our compliance with legal and regulatory requirements, the organization and performance of our internal audit function and the qualifications, independence and performance of our independent registered public accounting firm. | ||||||
Tesla, Inc. 2023 Proxy Statement 65 |
The management of Tesla is responsible for establishing and maintaining internal controls and for preparing Tesla’s consolidated financial statements. The independent registered public accounting firm is responsible for auditing the financial statements. It is the responsibility of the Audit Committee to oversee these activities. The Audit Committee has: • Reviewed and discussed the audited financial statements with Tesla management and with PricewaterhouseCoopers LLP, Tesla’s independent registered public accounting firm; • Discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and • Received the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding PricewaterhouseCoopers LLP’s communications with the Audit Committee concerning independence and has discussed with PricewaterhouseCoopers LLP their independence. Based upon these discussions and review, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in Tesla’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for filing with the United States Securities and Exchange Commission. Members of the Audit Committee: | ||||||
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Robyn Denholm (Chair) | ||||||
Hiromichi Mizuno | ||||||
James Murdoch | ||||||
66 Tesla, Inc. 2023 Proxy Statement |
Tesla has received notice from a stockholder of an intent to propose a resolution at the 2023 Annual Meeting requesting reporting on plans to eradicate child labor and forced labor from its supply chain (the “Floor Proposal”). If the Floor Proposal is presented at the 2023 Annual Meeting, the persons named in the proxy card will have discretionary authority pursuant to Rule 14a-4(c) under the Exchange Act with respect to the Floor Proposal and intends to exercise such discretion to vote AGAINST the proposal. Tesla knows of no other matters to be submitted at the 20222023 Annual Meeting. If any other matters properly come before the 20222023 Annual Meeting, it is the intention of the persons named in the proxy card to vote the shares they represent as the Board may recommend. Discretionary authority with respect to such other matters is granted by the execution of the proxy, whether through telephonic or Internet voting or, alternatively, by using a paper copy of the proxy card that has been requested.
It is important that your shares be represented at the 20222023 Annual Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed on the proxy card or, if so requested, by executing and returning, at your earliest convenience, the requested proxy card in the envelope that will have been provided.
THE BOARD OF DIRECTORS
Austin, Texas
, 2022
THE BOARD OF DIRECTORS |
Austin, Texas |
April 6, 2023 |
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
TESLA, INC.
ARTICLE I
The name of the corporation is Tesla Motors, Inc.
ARTICLE II
The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE IV
4.1 Authorized Capital Stock. The total number of shares of all classes of capital stock which the corporation is authorized to issue is 26,100,000,000 shares, consisting of 26,000,000,000 shares of Common Stock, par value $0.001 per share (the “Common Stock”), and 100,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”).
4.2 Increase or Decrease in Authorized Capital Stock. The number of authorized shares of Preferred Stock or Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the corporation entitled to vote generally in the election of directors, irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), voting together as a single class, without a separate vote of the holders of the class or classes the number of authorized shares of which are being increased or decreased, unless a vote by any holders of one or more series of Preferred Stock is required by the express terms of any series of Preferred Stock as provided for or fixed pursuant to the provisions of Section 4.4 of this Article IV.
4.3 Common Stock.
(a) The holders of shares of Common Stock shall be entitled to one vote for each such share on each matter properly submitted to the stockholders on which the holders of shares of Common Stock are entitled to vote. Except as otherwise required by law or this certificate of incorporation (this “Certificate of Incorporation” which term, as used herein, shall mean the certificate of incorporation of the corporation, as amended from time to time, including the terms of any certificate of designations of any series of Preferred Stock), and subject to the rights of the holders of Preferred Stock, at any annual or special meeting of the stockholders the holders of shares of Common Stock shall have the right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation that relates solely to the terms, number of shares, powers, designations, preferences, or relative participating, optional or other special rights (including, without limitation, voting rights), or to qualifications, limitations or restrictions thereon, of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one more other such series, to vote thereon pursuant to this Certificate of Incorporation (including, without limitation, by any certificate of designations relating to any series of Preferred Stock) or pursuant to the DGCL.
(b) Subject to the rights of the holders of Preferred Stock, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the corporation) when, as and if declared thereon by the Board of Directors from time to time out of any assets or funds of the corporation legally available therefor and shall share equally on a per share basis in such dividends and distributions.
Tesla, Inc. 2023 Proxy Statement 67 |
(c) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the corporation, after payment or provision for payment of the debts and other liabilities of the corporation, and subject to the rights of the holders of Preferred Stock in respect thereof, the holders of shares of Common Stock shall be entitled to receive all the remaining assets of the corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them.
4.4 Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board of Directors). The Board of Directors is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions and to set forth in a certification of designations filed pursuant to the DGCL the powers, designations, preferences and relative, participation, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any, of any wholly unissued series of Preferred Stock, including without limitation dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing.
(b) The Board of Directors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issuance of shares of such series then outstanding, subject to the powers, preferences and rights, and the qualifications, limitations and restrictions thereof stated in the Certificate of Incorporation or the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
ARTICLE V
5.1 General Powers. The business and affairs of the corporation shall be managed by or under the direction of the Board of Directors.
5.2 Number of Directors; Election; Term.
(a) Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, the number of directors that constitutes the entire Board of Directors of the corporation shall be fixed solely by resolution of the Board of Directors.
(b) Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, effective upon the closing date (the “Effective Date”) of the initial sale of shares of common stock in the corporation’s initial public offering pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, the directors of the corporation shall be divided into threetwo classes as nearly equal in size as is practicable, hereby designated Class I and, Class II and Class III. The initial assignment of members of the Board of Directors to each such class shall be made by the Board of Directors. The term of office of the initial Class I directors shall expire at the first regularly-scheduled annual meeting of the stockholders following the Effective Dateheld in 2023, and the term of office of the initial Class II directors shall expire at the secondregularly-scheduled annual meeting of the stockholders following the Effective Date and the term of office of the initial Class III directors shall expire at the third annual meeting of the stockholders following the Effective Dateheld in 2024. At each annual meeting of stockholders, commencing with the first regularly-scheduled annual meeting of stockholders following the Effective Dateheld in 2023, each of the successors elected to replace the directors of a Class whose term shall have expired at such annual meeting shall be elected to hold office until the thirdsecond annual meeting next succeeding his or her election and until his or her respective successor shall have been duly elected and qualified. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, if the number of directors that constitutes the Board of Directors is changed, any newly created directorships or decrease in directorships shall be so apportioned by the Board of Directors amongbetween the classes as to make allboth classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
(c) Notwithstanding the foregoing provisions of this Section 5.2, and subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation, or removal.
(d) Elections of directors need not be by written ballot unless the Bylaws of the corporation shall so provide.
5.3 Removal. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, a director may be removed from office by the stockholders of the corporation only for cause.
5.4 Vacancies and Newly Created Directorships. Subject to the rights of holders of any series of Preferred Stock with respect to the election of directors, and except as otherwise provided in the DGCL, vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, or by a sole remaining director, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been assigned by the Board of Directors and until his or her successor shall be duly elected and qualified.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the corporation is expressly authorized to adopt, amend or repeal the Bylaws of the corporation.
ARTICLE VII
7.1 No Action by Written Consent of Stockholders. Except as otherwise expressly provided by the terms of any series of Preferred Stock permitting the holders of such series of Preferred Stock to act by written consent, any action required or permitted to be taken by stockholders of the corporation must be effected at a duly called annual or special meeting of the stockholders and may not be effected by written consent in lieu of a meeting.
7.2 Special Meetings. Except as otherwise expressly provided by the terms of any series of Preferred Stock permitting the holders of such series of Preferred Stock to call a special meeting of the holders of such series, special meetings of stockholders of the corporation may be called only by the Board of Directors, the chairperson of the Board of Directors, the chief executive officer or the president (in the absence of a chief executive officer), and the ability of the stockholders to call a special meeting is hereby specifically denied. The Board of Directors may cancel, postpone or reschedule any previously scheduled special meeting at any time, before or after the notice for such meeting has been sent to the stockholders.
7.3 Advance Notice. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the corporation shall be given in the manner provided in the Bylaws of the corporation.
ARTICLE VIII
8.1 Limitation of Personal Liability. To the fullest extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or amendment of this Section 8.1 by the stockholders of the corporation or by changes in law, or the adoption of any other provision of this Certificate of Incorporation inconsistent with this Section 8.1 will, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the corporation to further limit or eliminate the liability of directors) and shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or amendment or adoption of such inconsistent provision with respect to acts or omissions occurring prior to such repeal or amendment or adoption of such inconsistent provision.
8.2 Indemnification. To the fullest extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, the corporation is also authorized to provide indemnification of (and advancement of expenses to) its directors, officers and agents of the corporation (and any other persons to which the DGCL permits the corporation to provide indemnification) through bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise.
ARTICLE IX
The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation (including any rights, preferences or other designations of Preferred Stock), in the manner now or hereafter prescribed by this Certificate of Incorporation and the DGCL; and all rights, preferences and privileges herein conferred upon stockholders by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article IX. Notwithstanding any other provision of this Certificate of Incorporation, and in addition to any other vote that may be required by law or the terms of any series of Preferred Stock, the affirmative vote of the holders of at least 662/3% of the voting power of all then outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision as part of this Certificate of Incorporation inconsistent with the purpose and intent of, Article V, Article VI, Article VII or this Article IX (including, without limitation, any such Article as renumbered as a result of any amendment, alteration, change, repeal or adoption of any other Article).
AMENDED AND RESTATED BYLAWS OF
TESLA, INC.
1.1 REGISTERED OFFICE
The registered office of Tesla, Inc. shall be fixed in the corporation’s certificate of incorporation. References in these bylaws to the certificate of incorporation shall mean the certificate of incorporation of the corporation, as amended from time to time, including the terms of any certificate of designations of any series of Preferred Stock.
The corporation’s board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business.
ARTICLE II — MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. The board of directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the corporation’s principal executive office.
The annual meeting of stockholders shall be held on such date, at such time, and at such place (if any) within or without the State of Delaware as shall be designated from time to time by the board of directors and stated in the corporation’s notice of the meeting. At the annual meeting, directors shall be elected and any other proper business may be transacted.
(i) A special meeting of the stockholders, other than those required by statute, may be called at any time only by (A) the board of directors, (B) the chairperson of the board of directors, (C) the chief executive officer or (D) the president (in the absence of a chief executive officer). A special meeting of the stockholders may not be called by any other person or persons. The board of directors may cancel, postpone or reschedule any previously scheduled special meeting at any time, before or after the notice for such meeting has been sent to the stockholders.
(ii) The notice of a special meeting shall include the purpose for which the meeting is called. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the board of directors, the chairperson of the board of directors, the chief executive officer or the president (in the absence of a chief executive officer). Nothing contained in this Section 2.3(ii) shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of the board of directors may be held.
(i) Advance Notice of Stockholder Business. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be brought: (A) pursuant to the corporation’s proxy materials with respect to such meeting, (B) by or at the direction of the board of directors, or (C) by a stockholder of the corporation who (1) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(i) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has timely complied in proper written form with the notice procedures set forth in this Section 2.4(i). In addition, for business to be properly brought before an annual meeting by a stockholder, such business must be a proper matter for stockholder action pursuant to these bylaws and applicable law. Except for proposals properly made in accordance with Rule 14a-8 under the Securities and Exchange Act of 1934, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations), and included in the notice of meeting given by or at the direction of the board of directors, for the avoidance of doubt, clause (C) above shall be the exclusive means for a stockholder to bring business before an annual meeting of stockholders.
(a) To comply with clause (C) of Section 2.4(i) above, a stockholder’s notice must set forth all information required under this Section 2.4(i) and must be timely received by the secretary of the corporation. To be timely, a stockholder’s notice must be received by the secretary at the principal executive offices of the corporation not later than the 45th day nor earlier than the 75th day before the one-year anniversary of the date on which the corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the date of the previous year’s annual meeting, then, for notice by the stockholder to be timely, it must be so received by the secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting, or (ii) the tenth day following the day on which Public Announcement (as defined below) of the date of such annual meeting is first made. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described in this Section 2.4(i)(a). “Public Announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or any successor thereto (the “1934 Act”).
(b) To be in proper written form, a stockholder’s notice to the secretary must set forth as to each matter of business the stockholder intends to bring before the annual meeting: (1) a brief description of the business intended to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business and any Stockholder Associated Person (as defined below), (3) the class and number of shares of the corporation that are held of record or are beneficially owned by the stockholder or any Stockholder Associated Person and any derivative positions held or beneficially held by the stockholder or any Stockholder Associated Person, (4) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, (5) any material interest of the stockholder or a Stockholder Associated Person in such business, and (6) a statement whether either such stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry the proposal (such information provided and statements made as required by clauses (1) through (6), a “Business Solicitation Statement”). In addition, to be in proper written form, a stockholder’s notice to the secretary must be supplemented not later than ten days following the record date for notice of the meeting to disclose the information contained in clauses (3) and (4) above as of the record date for notice of the meeting. For purposes of this Section 2.4, a “Stockholder Associated Person” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such stockholder and on whose behalf the proposal or nomination, as the case may be, is being made, or (iii) any person controlling, controlled by or under common control with such person referred to in the preceding clauses (i) and (ii).
(c) Without exception, no business shall be conducted at any annual meeting except in accordance with the provisions set forth in this Section 2.4(i) and, if applicable, Section 2.4(ii). In addition, business proposed to be brought by a stockholder may not be brought before the annual meeting if such stockholder or a Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Business Solicitation Statement applicable to such business or if the Business Solicitation Statement applicable to such business contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that business was not properly brought before the annual meeting and in accordance with the provisions of this Section 2.4(i), and, if the chairperson should so determine, he or she shall so declare at the annual meeting that any such business not properly brought before the annual meeting shall not be conducted.
(ii) Advance Notice of Director Nominations at Annual Meetings. Notwithstanding anything in these bylaws to the contrary, only persons who are nominated in accordance with the procedures set forth in this Section 2.4(ii) shall be eligible for election or re-election as directors at an annual meeting of stockholders. Nominations of persons for election or re-election to the board of directors of the corporation shall be made at an annual meeting of stockholders only (A) by or at the direction of the board of directors or (B) by a stockholder of the corporation who (1) was a stockholder of record at the time of the giving of the notice required by this Section 2.4(ii) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has complied with the notice procedures set forth in this Section 2.4(ii). In addition to any other applicable requirements, for a nomination to be made by a stockholder, the stockholder must have given timely notice thereof in proper written form to the secretary of the corporation.
(a) To comply with clause (B) of Section 2.4(ii) above, a nomination to be made by a stockholder must set forth all information required under this Section 2.4(ii) and must be received by the secretary of the corporation at the principal executive offices of the corporation at the time set forth in, and in accordance with, the final three sentences of Section 2.4(i)(a) above.
(b) To be in proper written form, such stockholder’s notice to the secretary must set forth:
(1) as to each person (a “nominee”) whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of the nominee, (B) the principal occupation or employment of the nominee, (C) the class and number of shares of the corporation that are held of record or are beneficially owned by the nominee and any derivative positions held or beneficially held by the nominee, (D) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of the nominee with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting power of the nominee, (E) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, (F) a written statement executed by the nominee acknowledging that as a director of the corporation, the nominee will owe a fiduciary duty under Delaware law with respect to the corporation and its stockholders, and (G) any other information relating to the nominee that would be required to be disclosed about such nominee if proxies were being solicited for the election or re-election of the nominee as a director, or that is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation the nominee’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected or re-elected, as the case may be); and
(2) as to such stockholder giving notice, (A) the information required to be provided pursuant to clauses (2) through (5) of Section 2.4(i)(b) above, and the supplement referenced in the second sentence of Section 2.4(i)(b) above (except that the references to “business” in such clauses shall instead refer to nominations of directors for purposes of this paragraph), and (B) a statement whether either such stockholder or Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of a number of the corporation’s voting shares reasonably believed by such stockholder or Stockholder Associated Person to be necessary to elect or re-elect such nominee(s) (such information provided and statements made as required by clauses (A) and (B) above, a “Nominee Solicitation Statement”).
(c) At the request of the board of directors, any person nominated by a stockholder for election or re-election as a director must furnish to the secretary of the corporation (1) that information required to be set forth in the stockholder’s notice of nomination of such person as a director as of a date subsequent to the date on which the notice of such person’s nomination was given and (2) such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director or audit committee financial expert of the corporation under applicable law, securities exchange rule or regulation, or any publicly-disclosed corporate governance guideline or committee charter of the corporation and (3) that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee; in the absence of the furnishing of such information if requested, such stockholder’s nomination shall not be considered in proper form pursuant to this Section 2.4(ii).
(d) Without exception, no person shall be eligible for election or re-election as a director of the corporation at an annual meeting of stockholders unless nominated in accordance with the provisions set forth in this Section 2.4(ii). In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that a nomination was not made in accordance with the provisions prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the annual meeting, and the defective nomination shall be disregarded.
(iii) Advance Notice of Director Nominations for Special Meetings.
(a) For a special meeting of stockholders at which directors are to be elected or re-elected, nominations of persons for election or re-election to the board of directors shall be made only (1) by or at the direction of the board of directors or (2) by any stockholder of the corporation who (A) is a stockholder of record at the time of the giving of the notice required by this Section 2.4(iii) and on the record date for the determination of stockholders entitled to vote at the special meeting and (B) delivers a timely written notice of the nomination to the secretary of the corporation that includes the information set forth in Sections 2.4(ii)(b) and (ii)(c) above. To be timely, such notice must be received by the secretary at the principal executive offices of the corporation not later than the close of business on the later of the 90th day prior to such special meeting or the tenth day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected or re-elected at such meeting. A person shall not be eligible for election or re-election as a director at a special meeting unless the person is nominated (i) by or at the direction of the board of directors or (ii) by a stockholder in accordance with the notice procedures set forth in this Section 2.4(iii). In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading.
(b) The chairperson of the special meeting shall, if the facts warrant, determine and declare at the meeting that a nomination or business was not made in accordance with the procedures prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the meeting, and the defective nomination or business shall be disregarded.
(iv) Other Requirements and Rights. In addition to the foregoing provisions of this Section 2.4, a stockholder must also comply with all applicable requirements of state law and of the 1934 Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.4. Nothing in this Section 2.4 shall be deemed to affect any rights of:
(a) a stockholder to request inclusion of proposals in the corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the 1934 Act; or
(b) the corporation to omit a proposal from the corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the 1934 Act.
2.5 NOTICE OF STOCKHOLDERS’ MEETINGS
Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided in the DGCL, the certificate of incorporation or these bylaws, the written notice of any meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.
The holders of a majority of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. Where a separate vote by a class or series or classes or series is required, a majority of the outstanding shares of such class or series or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter, except as otherwise provided by law, the certificate of incorporation or these bylaws
If a quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the board of directors shall fix a new record date for notice of such adjourned meeting in accordance with Section 213(a) of the DGCL and Section 2.11 of these bylaws, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.
The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business. The chairperson of any meeting of stockholders shall be designated by the board of directors; in the absence of such designation, the chairperson of the board, if any, the chief executive officer (in the absence of the chairperson) or the president (in the absence of the chairperson of the board and the chief executive officer), or in their absence any other executive officer of the corporation, shall serve as chairperson of the stockholder meeting.
The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.
Except as otherwise required by law, the certificate of incorporation or these bylaws, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Directors shall be elected by a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors, provided, however, that the directors shall be elected by a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors and cast in the election of directors at any meeting of stockholders for which (i) the secretary of the Company receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in Section 2.4 of these Bylaws and (ii) such nomination has not been withdrawn by such stockholder on or prior to the tenth (10th) day preceding the date Company first mails its notice of meeting for such meeting to the stockholders. Where a separate vote by a class or series or classes or series is required, in all matters other than the election of directors, the affirmative vote of the majority of shares of such class or series or classes or series present in person or represented by proxy at the meeting shall be the act of such class or series or classes or series, except as otherwise provided by law, the certificate of incorporation or these bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Subject to the rights of the holders of the shares of any series of Preferred Stock or any other class of stock or series thereof that have been expressly granted the right to take action by written consent, any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders.
In order that the corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the board of directors so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the board of directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.
If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with the provisions of Section 213 of the DGCL and this Section 2.11 at the adjourned meeting.
In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.
Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A written proxy may be in the form of a telegram, cablegram, or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram, or other means of electronic transmission was authorized by the person.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date. The stockholder list shall be arranged in alphabetical order and show the address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least 10 days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the corporation’s principal place of business. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.
Before any meeting of stockholders, the board of directors shall appoint an inspector or inspectors of election to act at the meeting or its adjournment. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy.
Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed and designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of each share, (ii) determine the shares of capital stock of the corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the corporation represented at the meeting and such inspector or inspectors’ count of all votes and ballots.
In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspector or inspectors may consider such information as is permitted by applicable law. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all.
3.1 POWERS
The business and affairs of the corporation shall be managed by or under the direction of the board of directors, except as may be otherwise provided in the DGCL or the certificate of incorporation.
The board of directors shall consist of one or more members, each of whom shall be a natural person. Unless the certificate of incorporation fixes the number of directors, the number of directors shall be determined from time to time solely by resolution of the board of directors. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors.
Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation; provided, however, that if such notice is given by electronic transmission, such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the director. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. Acceptance of such resignation shall not be necessary to make it effective. A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors resign from the board of directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.
Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. If the directors are divided into classes, a person so elected by the directors then in office to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board of directors (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the voting stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors.
Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairperson of the board of directors, the chief executive officer, the president, the secretary or a majority of the authorized number of directors, at such times and places as he or she or they shall designate.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile; or
(iv) sent by electronic mail,
directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the corporation’s records.
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the corporation’s principal executive office) nor the purpose of the meeting.
At all meetings of the board of directors, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws. In the event a director or directors abstain or are disqualified from a vote, the majority vote of the director or the directors thereof not abstaining or disqualified from voting, whether or not such director or directors constitute a quorum, shall be the act of the board of directors.
If the certificate of incorporation provides that one or more directors shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other proportion of the votes of the directors.
3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board of directors or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board of directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
3.10 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors.
A director may be removed from office by the stockholders of the corporation only for cause.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.
4.1 COMMITTEES OF DIRECTORS
The board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. In the event a member or members of a committee abstain or are disqualified from a vote, the majority vote of the member or members thereof not abstaining or disqualified from voting, whether or not such member or members constitute a quorum, shall be the act of such committee. Any such committee, to the extent provided in the resolution of the board of directors or in these bylaws, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the corporation.
Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) Section 3.5 (place of meetings and meetings by telephone);
(ii) Section 3.6 (regular meetings);
(iii) Section 3.7 (special meetings; notice);
(iv) Section 3.8 (quorum; voting);
(v) Section 3.9 (action without a meeting); and
(vi) Section 7.5 (waiver of notice)
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members. However:
(i) the time of regular meetings of committees may be determined by resolution of the committee;
(ii) special meetings of committees may also be called by resolution of the committee; and
(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.
Any provision in the certificate of incorporation providing that one or more directors shall have more or less than one vote per director on any matter shall apply to voting in any committee or subcommittee, unless otherwise provided in the certificate of incorporation or these bylaws.
Unless otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the board of directors designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
5.1 OFFICERS
The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the board of directors, a chairperson of the board of directors, a vice chairperson of the board of directors, a chief executive officer, a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.
The board of directors shall appoint the officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in this Section 5 for the regular election to such office.
The board of directors may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board of directors or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written or electronic notice to the corporation; provided, however, that if such notice is given by electronic transmission, such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the officer. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.
Any vacancy occurring in any office of the corporation shall be filled by the board of directors or as provided in Section 5.3.
5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairperson of the board of directors, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
5.7 AUTHORITY AND DUTIES OF OFFICERS
All officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the board of directors.
5.8 THE CHAIRPERSON OF THE BOARD
The chairperson of the board shall have the powers and duties customarily and usually associated with the office of the chairperson of the board. The chairperson of the board shall preside at meetings of the stockholders and of the board of directors.
5.9 THE VICE CHAIRPERSON OF THE BOARD
The vice chairperson of the board shall have the powers and duties customarily and usually associated with the office of the vice chairperson of the board. In the case of absence or disability of the chairperson of the board, the vice chairperson of the board shall perform the duties and exercise the powers of the chairperson of the board.
5.10 THE CHIEF EXECUTIVE OFFICER
The chief executive officer shall have, subject to the supervision, direction and control of the board of directors, ultimate authority for decisions relating to the supervision, direction and management of the affairs and the business of the corporation customarily and usually associated with the position of chief executive officer, including, without limitation, all powers necessary to direct and control the organizational and reporting relationships within the corporation. If at any time the office of the chairperson and vice chairperson of the board shall not be filled, or in the event of the temporary absence or disability of the chairperson of the board and the vice chairperson of the board, the chief executive officer shall perform the duties and exercise the powers of the chairperson of the board unless otherwise determined by the board of directors.
The president shall have, subject to the supervision, direction and control of the board of directors, the general powers and duties of supervision, direction and management of the affairs and business of the corporation customarily and usually associated with the position of president. The president shall have such powers and perform such duties as may from time to time be assigned to him or her by the board of directors, the chairperson of the board or the chief executive officer. In the event of the absence or disability of the chief executive officer, the president shall perform the duties and exercise the powers of the chief executive officer unless otherwise determined by the board of directors.
5.12 THE VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS
Each vice president and assistant vice president shall have such powers and perform such duties as may from time to time be assigned to him or her by the board of directors, the chairperson of the board, the chief executive officer or the president.
5.13 THE SECRETARY AND ASSISTANT SECRETARIES
(i) The secretary shall attend meetings of the board of directors and meetings of the stockholders and record all votes and minutes of all such proceedings in a book or books kept for such purpose. The secretary shall have all such further powers and duties as are customarily and usually associated with the position of secretary or as may from time to time be assigned to him or her by the board of directors, the chairperson of the board, the chief executive officer or the president.
(ii) Each assistant secretary shall have such powers and perform such duties as may from time to time be assigned to him or her by the board of directors, the chairperson of the board, the chief executive officer, the president or the secretary. In the event of the absence, inability or refusal to act of the secretary, the assistant secretary (or if there shall be more than one, the assistant secretaries in the order determined by the board of directors) shall perform the duties and exercise the powers of the secretary.
5.14 THE CHIEF FINANCIAL OFFICER AND ASSISTANT TREASURERS
(i) The chief financial officer shall be the treasurer of the corporation. The chief financial officer shall have custody of the corporation’s funds and securities, shall be responsible for maintaining the corporation’s accounting records and statements, shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation, and shall deposit or cause to be deposited moneys or other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. The chief financial officer shall also maintain adequate records of all assets, liabilities and transactions of the corporation and shall assure that adequate audits thereof are currently and regularly made. The chief financial officer shall have all such further powers and duties as are customarily and usually associated with the position of chief financial officer, or as may from time to time be assigned to him or her by the board of directors, the chairperson, the chief executive officer or the president.
(ii) Each assistant treasurer shall have such powers and perform such duties as may from time to time be assigned to him or her by the board of directors, the chief executive officer, the president or the chief financial officer. In the event of the absence, inability or refusal to act of the chief financial officer, the assistant treasurer (or if there shall be more than one, the assistant treasurers in the order determined by the board of directors) shall perform the duties and exercise the powers of the chief financial officer.
6.1 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates, provided that the board of directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the corporation by the chairperson of the board of directors or vice-chairperson of the board of directors, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The corporation shall not have power to issue a certificate in bearer form.
The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly-paid shares, or upon the books and records of the corporation in the case of uncertificated partly-paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully-paid shares, the corporation shall declare a dividend upon partly-paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
6.2 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this Section 6.2 or Sections 156, 202(a) or 218(a) of the DGCL or with respect to this Section 6.2 a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except
as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.
6.3 LOST, STOLEN OR DESTROYED CERTIFICATES
Except as provided in this Section 6.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
The board of directors, subject to any restrictions contained in the certificate of incorporation or applicable law, may declare and pay dividends upon the shares of the corporation’s capital stock. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock, subject to the provisions of the certificate of incorporation.
The board of directors may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.
Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by an attorney duly authorized, and, if such stock is certificated, upon the surrender of a certificate or certificates for a like number of shares, properly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer; provided, however, that such succession, assignment or authority to transfer is not prohibited by the certificate of incorporation, these bylaws, applicable law or contract.
The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
The corporation:
(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;
(ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and
(iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII — MANNER OF GIVING NOTICE AND WAIVER
7.1 NOTICE OF STOCKHOLDERS’ MEETINGS
Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the corporation’s records. An affidavit of the secretary or an assistant secretary of the corporation or of the transfer agent or other agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
7.2 NOTICE BY ELECTRONIC TRANSMISSION
Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if:
(i) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent; and
(ii) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice.
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
(i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
(ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;
(iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and
(iv) if by any other form of electronic transmission, when directed to the stockholder.
An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
7.3 NOTICE TO STOCKHOLDERS SHARING AN ADDRESS
Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the corporation under the provisions of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any stockholder who fails to object in writing to the corporation, within 60 days of having been given written notice by the corporation of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.
7.4 NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
Whenever notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
Whenever notice is required to be given to stockholders, directors or other persons under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders or the board of directors, as the case may be, need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.
ARTICLE VIII — INDEMNIFICATION
8.1 Indemnification of Directors and Officers in Third Party Proceedings
Subject to the other provisions of this Article VIII, the corporation shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director of the corporation or an officer of the corporation, or while a director of the corporation or officer of the corporation is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.
8.2 Indemnification of Directors and Officers in Actions by or in the Right of the CORPORATION
Subject to the other provisions of this Article VIII, the corporation shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the corporation, or while a director or officer of the corporation is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
To the extent that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 8.1 or Section 8.2, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
Subject to the other provisions of this Article VIII, the corporation shall have power to indemnify its employees and its agents to the extent not prohibited by the DGCL or other applicable law. The board of directors shall have the power to delegate the determination of whether employees or agents shall be indemnified to such person or persons as the board of determines.
8.5Advanced Payment of Expenses
Expenses (including attorneys’ fees) incurred by an officer or director of the corporation in defending any Proceeding shall be paid by the corporation in advance of the final disposition of such Proceeding upon receipt of a written request therefor (together with documentation reasonably evidencing such expenses) and an undertaking by or on behalf of the person to repay such amounts if it shall ultimately be determined that the person is not entitled to be indemnified under this Article VIII or the DGCL. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems reasonably appropriate and shall be subject to the corporation’s expense guidelines. The right to advancement of expenses shall not apply to any claim for which indemnity is excluded pursuant to these bylaws, but shall apply to any Proceeding referenced in Section 8.6(ii) or 8.6(iii) prior to a determination that the person is not entitled to be indemnified by the corporation.
8.6 Limitation on Indemnification
Subject to the requirements in Section 8.3 and the DGCL, the corporation shall not be obligated to indemnify any person pursuant to this Article VIII in connection with any Proceeding (or any part of any Proceeding):
(i) for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid;
(ii) for an accounting or disgorgement of profits pursuant to Section 16(b) of the 1934 Act, or similar provisions of federal, state or local statutory law or common law, if such person is held liable therefor (including pursuant to any settlement arrangements);
(iii) for any reimbursement of the corporation by such person of any bonus or other incentive-based or equity-based compensation or of any profits realized by such person from the sale of securities of the corporation, as required in each case under the 1934 Act (including any such reimbursements that arise from an accounting restatement of the corporation pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the corporation of profits arising from the purchase and sale by such person of securities in violation of Section 306 of the Sarbanes-Oxley Act), if such person is held liable therefor (including pursuant to any settlement arrangements);
(iv) initiated by such person against the corporation or its directors, officers, employees, agents or other indemnitees, unless (a) the board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (b) the corporation provides the indemnification, in its sole discretion, pursuant to the powers vested in the corporation under applicable law, (c) otherwise required to be made under Section 8.7 or (d) otherwise required by applicable law; or
(v) if prohibited by applicable law; provided, however, that if any provision or provisions of this Article VIII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Article VIII (including, without limitation, each portion of any paragraph or clause containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Article VIII (including, without limitation, each such portion of any paragraph or clause containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforcebable.
If a claim for indemnification or advancement of expenses under this Article VIII is not paid in full within 90 days after receipt by the corporation of the written request therefor, the claimant shall be entitled to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement of expenses. The corporation shall indemnify such person against any and all expenses that are incurred by such person in connection with any action for indemnification or advancement of expenses from the corporation under this Article VIII, to the extent such person is successful in such action, and to the extent not prohibited by law. In any such suit, the corporation shall, to the fullest extent not prohibited by law, have the burden of proving that the claimant is not entitled to the requested indemnification or advancement of expenses.
The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.
The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of the DGCL.
The rights to indemnification and advancement of expenses conferred by this Article VIII shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
8.11 Effect of Repeal or Modification
Any amendment, alteration or repeal of this Article VIII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to such amendment, alteration or repeal.
For purposes of this Article VIII, references to the “corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VIII, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this Article VIII.
9.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
Except as otherwise provided by law, the certificate of incorporation or these bylaws, the board of directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute any document or instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.
The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the board of directors. The corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both an entity and a natural person.
These bylaws may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the affirmative vote of the holders of at least 66 2/3% of the total voting power of outstanding voting securities, voting together as a single class, shall be required for the stockholders of the corporation to alter, amend or repeal, or adopt any bylaw inconsistent with, the following provisions of these bylaws: Article II, Sections 3.1, 3.2, 3.4 and 3.11 of Article III, Article VIII and this Article X (including, without limitation, any such Article or Section as renumbered as a result of any amendment, alteration, change, repeal, or adoption of any other Bylaw). The board of directors shall also have the power to adopt, amend or repeal bylaws; provided, however, that a bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the board of directors.
Unless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim for or based on a breach of a fiduciary duty owed by any current or former director or officer or other employee of the corporation to the corporation or the corporation’s stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty, (iii) any action asserting a claim against the corporation or any current or former director or officer or other employee of the corporation arising pursuant to any provision of the DGCL or the certificate of incorporation or these bylaws (as either may be amended from time to time), (iv) any action asserting a claim related to or involving the corporation that is governed by the internal affairs doctrine, or (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL shall be a state court within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware).
TESLA VOTE C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 extNOTE 000004 ENDORSEMENT_LINEENDORSEMENT LINE SACKPACK Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Using a black ink pen, mark your votes with an X as shown in this example. X Please do not write outside the designated areas. C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Your vote matters heres how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically before the meeting must be received by 1:00am,00 am, (central time), on August 4, 2022May 16, 2023 Online Before the Meeting: Go to www.envisionreports.com/TSLA or scan the QC code – login details are located in the shaded bar below. During the Meeting: GotGo to www.meetnow.global/MJKP2QFTESLA2023 - login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card 1234 5678 9012 345 IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals- The Board recommends a vote FOR all nominees in Proposal 1, FOR Proposals 2,3,42 and 5,4, EVERY THREE YEARS on Proposal 3 and AGAINST Proposals 6,7,8,9,10,11,12 and 13Proposal 5. + 1. Election of Directors: For Against Abstain 01 - Elon Musk 02 - Robyn Denholm For Against Abstain 0103 - Ira Ehrenprei 02 - Kathleen Wilson-ThompsonJB Straubel For Against Abstain 2. Tesla proposal for adoption of amendments to certificate of incorporation to reduce director terms to two years. For Against Abstain 3. Tesla proposal for adoption of amendments to certificate of incorporation and bylaws to eliminate applicable supermajority voting requirements.approve executive compensation on a nonbinding advisory basis. For Against Abstain 4. Tesla proposal for adoption of amendments to certificate of incorporation to increase the number of authorized shares of common stock by 4,000,000,000 shares. 5. Tesla proposal to ratify the appointment of independent registered public accounting firm. 6. Stockholder3. Tesla proposal regarding proxy access. 7. Stockholder proposal regarding annual reportingto approve the frequency of future votes on antidiscrimination and harassment efforts. 8. Stockholder proposal regarding annual reportingexecutive compensation on Board diversity. 9.a non-binding advisory basis. 1 Year 2 Years 3 Years Abstain 5. Stockholder proposal regarding reporting on employee arbitration. 10. Stockholder proposal regarding reporting on lobbying. 11. Stockholder proposal regarding adoption of a freedom of association and collective bargaining policy 12. Stockholder proposal regarding additional reporting on child labor. 13. Stockholder proposal regarding additional reporting on waterkey-person risk. C1234567890 JNTFor Against Abstain C 1234567890 1 U P X J N T 5 7 2 7 8 4 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1UPX 542927 03N7QD+ 03S6VG
The 20222023 Annual Meeting of Stockholders of Tesla, Inc. will be held on Thursday, August 4, 2022Tuesday, May 16, 2023 at 4:303:00 pm CT, both virtually via the Internet at www.meetnow.global/MJKP2QFTESLA2023 and in person for a limited number of stockholders at Gigafactory Texas, 1 Tesla Road, Austin, TX 78725. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy — Tesla, Inc. + Notice of 20222023 Annual Meeting of Stockholders Gigafactory Texas - 1 Tesla Road, Austin, TX 78725 This Proxy is Solicited on Behalf of the Board of Directors for the Annual Meeting – August 4, 2022May 16, 2023 at 4:303:00 PM CT Elon Musk and Zachary Kirkhorn, or any of them, each with the power of substitution, are hereby authorized to represent as proxies and vote with respect to the proposals set forth on the reverse side and in the discretion of such proxies on all other matters that may be properly presented for action all shares of stock of Tesla, Inc. the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held virtually via the Internet at www.meetnow.global/MJKP2QFTESLA2023 and in person for a limited number of stockholders at 4:30pm3:00 pm CT on August 4, 2022,May 16, 2023, or any postponement, adjournment or continuation thereof, and instructs said proxies to vote as specified on the reverse side. Shares represented by this proxy will be voted as directed by the stockholder. If no such directions are indicated, the Proxies will have the authority to vote FOR all nominees in Proposal 1, FOR Proposals 2,3,42 and 5,4 and EVERY THREE YEARS on Proposal 3, and AGAINST Proposals 6,7,8,9,10,11,12 and 13.Proposal 5. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the annual meetingmeeting. (Items to be voted appear on reverse side.) B.B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C.C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting. +