Market Analysis

Norwegian Investor KLP, a Tesla Shareholder, to Back Motion for Collective Bargaining at EV Giant's Annual Meeting

Amos Simanungkalit · 04 Jun 20242.1K Views

Tesla (NASDAQ:TSLA) investor KLP, Norway's largest pension fund, will vote in favour of a shareholder proposal urging the US electric car maker to engage in wage and other labour negotiations as it continues to face industrial action in Sweden.

A strike by Tesla mechanics in Sweden, one of the country's longest industrial disputes, has disrupted operations since October 27, sparking concern among Nordic institutional investors and sympathy strikes in the Nordic region.

Tesla will hold its annual general meeting on 13 June.

On the agenda is a proposal from four institutional investors calling on Tesla to "adopt a policy explicitly committing to non-interference and good faith negotiations ... with respect to freedom of association and collective bargaining".

"We will be supporting the proposal," Kiran Aziz, head of responsible investment at KLP, told Reuters. "We hope (it) will get significant support from other shareholders as well."

KLP holds 900,000 Tesla shares worth about 1.7 billion kroner ($162 million), a stake of about 0.02% as of the end of February, according to LSEG Workspace data. Last summer it removed Tesla shares from its sustainable funds.

UNION STANCE COULD BE UNDERMINED

Sweden's AMF pension fund will also support the resolution and is "actively working" to get other investors to back it.

"Freedom of association ... and the right to collective bargaining are fundamental human rights protected by international norms," it said in a statement on 17 May.

The conflict could have wider implications for Tesla, whose tough stance on unions globally could be undermined if it backs down in Sweden.

KLP will also vote against a proposed plan to move Tesla from Delaware to Texas and against ratifying a $56 billion pay package for CEO Elon Musk.

"We do not find the rationale (for the move to Texas) sufficiently strong and convincing," Aziz said, referring to Tesla's description of Texas as its "home" and the state where one of its main factories is located.

"It's not clear what tangible benefits the move would bring, while there are clearly additional costs and potential risks that could come with it," she said, without elaborating on those risks.

As for Musk's pay package, "we voted against it in 2018 when it was introduced, and we continue to believe that it is both excessive and results in significant dilution to current shareholders," Aziz said.

In April, Tesla reported its first drop in quarterly revenue since 2020 to $21.3 billion in the three months to March, down from $23.33 billion a year earlier. The average analyst estimate was $22.15 billion, according to LSEG data.