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What Tesla’s annual general meeting signals about the future of unions on boardroom agendas

August 12, 2022, 12:52 PM UTC
Tesla trainee employees watch a demonstration
Some Tesla shareholders supported a proposal meant to bolster the right to unionize.
Mason Trinca—The Washington Post—Getty Images

Shareholder pressure has unquestionably made climate change, social justice, and other topics boardroom issues. Proposals from this proxy season suggest the same could soon be true of workers’ right to organize.

Take Tesla‘s annual general meeting held last week. The biggest news to emerge from it was that shareholders had approved a 3-for-1 split of the company’s common stock. But for the board, there was much more to unpack.

This year, activist shareholders submitted several proposals targeting Tesla’s environmental and social obligations, including a few that aim to support workers’ rights. Although the proposals didn’t win enough votes to be passed, they did attract support from influential investors and proxy advisers who have historically focused more narrowly on a company’s financials. 

Here’s a sample of what has happened at Tesla and elsewhere:

  • At Tesla, the Washington, D.C.-based SOC Investment Group and the Shareholder Association for Research and Education (SHARE), a Canadian non-profit, submitted a proposal asking the company, which has been accused of union-busting in the U.S., to pledge that it will not interfere with employees’ freedom to organize. Shareholder proposals are typically nonbinding, but investors expect a company to take action if a proposal receives a majority, or even 30% or more, of votes. In this case, 32% of shareholders backed SHARE’s proposal.

    To be sure, the resolution wasn’t expected to win a majority vote, given that CEO Elon Musk and the board had urged shareholders to vote against it—and Musk has called ESG a scam. But pressure might be building for Musk and Tesla, especially as investors demand more say in who’s elected to the board.

    Notably, proxy advisers Glass Lewis and Institutional Shareholder Services (ISS) both recommended voting in favor of the resolution; asset managers Norges Bank, CalSTRS, and the Office of the New York City Comptroller also voiced support for it.
  • At Amazon’s spring meeting, SHARE also pushed for reporting about the company’s response to labor organizing at its warehouses. In Amazon’s case, the company had already said it would not block employees from organizing, yet it’s facing multiple allegations that it used illegal strategies to thwart labor campaigns. This proposal, too, was supported by proxy advisors Glass Lewis and ISS, and by major institutional investors, including three with 1 trillion or more assets under management: Legal & General Investment Management ($1.8 trillion), Norges Bank ($1.2 trillion), and Schroders ($1 trillion). The proposal was also rejected, though it was backed by 47% of independent shareholders.
  • Earlier this year, the chief advocacy officer at Trillium Asset Management penned an open letter to the Starbucks board and its CEO, asking the company to adopt a neutral stance toward labor organizers, commit to negotiating with employee unions in good faith, and “immediately cease all anti-union communications with employees.” Dozens of investors, representing $3.4 trillion in assets, were signatories. 

So what’s behind these actions?

Until recently, “there wasn’t much of a history of shareholder proposals that directly engage the question of things like union rights,” Kevin Thomas, CEO of SHARE, tells Fortune. That’s because investors used to think that the CEO and the executive suite were the only employees that boards needed to pay attention to, he adds. “That’s changed. Now, I think it’s commonly held that boards that don’t pay attention to the workforce as a whole just aren’t doing their job,” says Thomas. As with many issues, he says, the pandemic accelerated the growing awareness of boards’ responsibility to maintain fair workplaces and an understanding that shareholder value “depends on workers creating that value in the first place.”

Proxy advisers, he believes, also see that workers’ experiences are not divorced from financial risks. “Purely from a shareholder value perspective,” he argues, “decent work practices lead to lower risk for health and safety issues, stronger productivity, and lower turnover.” Unionization can also improve diversity and equity, he adds, and a company’s protocols for handling discrimination and harassment.

Microsoft’s June statement that it would respect and work with employees who were unionizing at Activision Blizzard, a video game maker the tech giant is acquiring, set the standard for other companies to follow, and boards should take note, Thomas says. “If you’re a good manager, you’re not afraid of unions,” he says. “You work with them to make a better workplace. It’s quite simple.”

Lila MacLellan


“I think Apple is doing the right thing with a lot of the environmental work, but ultimately their scorecard is ‘How many products did you sell?’”

—Malak Abu Sharkh, a former Apple supply chain manager who now works for a carbon removal startup, on why star talent is leaving Big Tech for climate tech.  

On the Agenda

👓 Read: A recent Twitter thread tracing the notion that “no one wants to work anymore” back to 1894 went viral. Bloomberg interviewed the history professor behind the tweet about why this misconception keeps resurfacing

📻Listen: “Red Flags You Won’t See on a CEO’s Resume” is a must-listen episode of HBR’s IdeaCast. Aiyesha Dey, an associate professor at Harvard Business School, explains her research linking materialism (fancy houses, flashy cars) and rule-breaking in a CEO’s personal life with potentially illegal trading activity and risky gambles on the job.

📖Bookmark: The corporate governance issues that dog cannabis companies, according to cannabis lawyers, are likely the same problems that foil other fast-growing startups in more run-of-the-mill industries.

Board diversity drops when companies underperform

HeeJung Jung, an assistant professor at Imperial College Business School in London, says she has empathy for board directors, the "very human" decision-makers atop corporate America's highest echelon. When under pressure, they make a predictable and universal mistake: They look for safety in familiarity.

Boards quickly spring into action when a company’s performance is slipping, says Jung. But who do U.S. corporate directors—who are still predominantly white and male—feel most comfortable with? “White males,” she says. As a result, the range of expertise in boardrooms improves, but diversity declines when companies experience a crisis.

Jung led a team that uncovered this hidden barrier to diversity after analyzing 15 years of data and board changes at 733 large U.S. manufacturing companies. Researchers found a positive correlation between board personnel changes that resulted in lower levels of diversity and periods in which boards struggled to reverse negative performance.  

Fortunately, boards can avoid this pitfall. Read Jung's suggestions for how to do that here.  


Anitta will remain Nubank's brand ambassador, but she stepped down from its board.

Corporate board duties can't compete with Lollapalloza: Brazilian singer Anitta cited scheduling conflicts as the reason she’s stepping away from her directorship at Nubank, a financial startup backed by Berkshire Hathaway, after 14 months on the job. Anitta (whose off-stage name is Larissa de Macedo Machado) will remain a brand ambassador; Fedex has named two nominees to its corporate board ahead of its September AGM: Retired Navy Vice Admiral Nancy Norton, a cybersecurity expert, and Stephen Gorman, former CEO of Air Methods Corporation; Eric Butler, former chief administrative officer at Union Pacific Corporation, was elected to the board of Eastman Chemical Company; The workplace online learning company OpenSesame named veteran CHRO Tamar Elkeles and former Deloitte executive Emily Rollins to its board of directors; The board at home fitness firm Nautilus elected Anne Saunders, a current director, as its chair. Saunders, a former retail industry leader who has served on the board for 10 years, will replace M. Carl Johnson, III, who has led the board since 2011 and is now retiring.

In Brief

- Kewsong Lee, who abruptly left his post as CEO at Carlyle Group earlier this week, reportedly never heard back from the company’s board after he proposed a performance-tied pay package for his renewed contract. 

- Women begin earning less than men long before the motherhood penalty becomes a threat.

- Are you an adventurer? A thinker? A learner? A decision sciences expert has identified five types of problem-solving profiles.

- Restaurant mogul Danny Meyer says inflation is ending the great resignation in the food service industry.

Editor’s Pick 

The “boy bosses” of Silicon Valley have had enough, writes the New York Times's Erin Griffith, in a feature story about departures at Instacart, Pinterest, and Airbnb. “It’s surely less fun being a CEO when markets are down, the economy is trending negative and regulation is increasing,” says Kevin Werbach, a professor of business at the Wharton School of the University of Pennsylvania.

The story begins:

“The young kings of Silicon Valley are dismounting their unicorns.

They’re writing sentimental blog posts that outline their legacies. They’re expressing hope for their companies’ prospects. They’re quitting their jobs leading the start-ups they founded.”

Keep reading here, and have a blissful weekend.

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