Tesla Inc. shareholders cleared the way Thursday for the company to complete its second stock split in about two years, based on a preliminary vote count.
Elon Musk's electric-vehicle maker, whose stock price has roughly tripled in the past two years, is planning a 3-for-1 stock split that the company has said is designed to make ownership more accessible to employees and individual investors. Tesla needed shareholders to sign off on issuing the new shares to complete the split. The move wouldn't affect the company's market value, which topped $960 billion as of Thursday.
That proposal was among more than a dozen facing investor consideration at Tesla's annual shareholder meeting, held at the company's Austin, Texas-area factory.
The gathering followed a recent rally in Tesla's stock price after the company reported second-quarter earnings that were better than expected. Tesla generated $2.3 billion in profit for the period, ahead of Wall Street's expectations but below its record quarterly profit of $3.3 billion in the first three months of the year.
An extended shutdown at Tesla's Shanghai assembly plant, paired with global supply-chain disruptions and labor shortages weighed on results.
Chief Financial Officer Zach Kirkhorn said on the company's July earnings call that Tesla was still aiming for 50% vehicle-delivery growth this year over 2021, though he acknowledged that reaching that target had become more difficult.
The investor gathering spotlighted concerns that some shareholders have expressed about Tesla's corporate governance. Several of the nonbinding proposals dealt with employment issues, from corporate efforts to prevent harassment and discrimination to how mandatory arbitration affects Tesla's employees and workplace culture. A preliminary tally indicated those measures didn't receive the requisite votes.
The company is facing scrutiny from state and federal employment authorities over issues including alleged racial discrimination and harassment at its Fremont, Calif., assembly plant. The California Department of Fair Employment and Housing sued Tesla in February, saying that Black workers routinely heard supervisors using racial slurs and were confronted with racist graffiti in the factory. Tesla has alleged misconduct by the California agency and said it is seeking dismissal of the case.
In June, the U.S. Equal Employment Opportunity Commission reached conclusions similar to those of the California employment agency, Tesla said in a securities filing, adding that it planned to begin settlement talks with federal officials.
Shareholders also backed the proposed re-election of the Tesla directors Ira Ehrenpreis and Kathleen Wilson-Thompson, who have served on the board since 2007 and 2018, respectively.
The proxy advisory firm Institutional Shareholder Services had urged investors to vote against their re-election, citing concern about the board's risk oversight and Tesla's response to a measure that shareholders approved last year. That nonbinding proposal called on Tesla to cut board members' terms to one year, from three.
Instead, Tesla asked shareholders to reduce directors' terms to two years. Such a proposal failed to gain the requisite votes last year or in 2019 and failed again this year.
Oracle Corp. co-founder Larry Ellison, who joined the board in 2018, didn't stand for re-election, meaning Tesla's board is poised to shrink to seven members, from eight.