A Deep Dive into Tesla’s Corporate Governance Approach

On Friday, Tesla released its impact report for 2021, outlining avoided emissions, energy consumption from factories and facilities, and energy generated from its solar panels. The report also provided a fascinating dive into Tesla’s corporate governance. This section offered a window into Tesla’s inner circle decision-making process.

While it’s certainly not as complex as a peer-reviewed white paper, it is a report, after all, and reading reports might not be your thing. Here, then, is an overview of the main points underpinning how Tesla’s corporate governance will work, circa 2022.

Sustainability Tip: The Corporate Sustainability Council, comprised of Tesla executives, collects data and prepares the analysis and content for its impact report. The Sustainability Council also presents this information to Tesla’s Board of Directors for review.

Responsibilities of the Board of Directors: The Board of Directors serves as a prudent trustee for shareholders and oversees the management of Tesla’s business, including reviewing the effectiveness of priorities, initiatives, programs and Tesla Impact Report Content. The importance of sound corporate governance is implicit in this approach. The Board continually evaluates its corporate governance structure, practices and policies and considers stakeholder feedback, including proposals generated at annual meetings. Directors meet regularly with senior management and the Sustainability Council. The board evaluates the management structure of the company; reviews the composition, size and performance of the board and its committees; evaluates individual directors; and identifies and assesses candidates for election or re-election to the Board.

Leadership: Elon Musk (Technoking and CEO), Zachary Kirkhorn (Master of Coin of Tesla and Chief Financial Officer), Andrew Baglino (Senior Vice President, Powertrain and Energy Engineering)

List of the board of directors: Elon Musk, Robyn M. Denholm, Ira Ehrenpreis, Larry Ellison, Hiro Mizuno, James Murdoch, Kimbal Musk, Kathleen Wilson-Thompson

Communication with employees: In order to provide regular and transparent communication with employees, Tesla employees, among other methods, provide feedback through surveys to identify strengths and opportunities for improvement, and have access to a feedback line. hotline for employees to report concerns.

Key corporate governance decisions: Tesla’s corporate governance structure facilitated several key decisions that might have seemed counter-intuitive to some, but which enabled Tesla to be successful in the long run. Here are some examples :

  • Build electric vehicles from scratch rather than just being a supplier of electric vehicle components;
  • Establishing an international network of stores, service centers and Supercharger stations despite regulatory hurdles and the significant capital outlay required to do so;
  • Build Gigafactory 1, the world’s largest lithium-ion battery factory, to scale more efficiently;
  • Expand into energy generation and storage through the acquisition of SolarCity Corporation in 2016 to create a vertically integrated sustainable energy company and empower individual consumers to be their own utility;
  • Deploy FSD City Streets beta software to their fleet to develop full self-driving capability in the future; and,
  • Only compensate the CEO of Tesla if other shareholders realize tremendous value.

4 Standing Committees: Each member of these committees qualifies as an independent director under NASDAQ listing standards.

  • Audit Committee: The Audit Committee assists the Board of Directors in monitoring accounting and financial reporting processes and in auditing its financial statements; compliance with legal and regulatory requirements: the qualifications, independence and performance of the independent auditor; the organization and operation of the Company’s internal audit function, as well as the Company’s internal accounting and financial controls; cash and finance issues; risk management, including data privacy and cybersecurity; and reviews and discusses the accounting valuation of the impact report and other ESG information.
  • Compensation Committee: The Compensation Committee is responsible for, among other things, fulfilling the responsibilities of the Board of Directors for the administration and oversight of Tesla’s employee benefit policies, plans and programs; compensation for Tesla executives and board members; administration of the Company’s employee benefit plans; and, reviewing Tesla’s talent-related human capital management practices generally, including how Tesla recruits, develops and retains diverse talent.
  • Nominating and Corporate Governance Committee: The Nominating and Corporate Governance Committee is responsible, among other things, for reviewing and making recommendations to the Board on matters relating to corporate governance; composition of the board; the identification, evaluation and nomination of candidate directors and the composition of Board committees; and conflicts of interest. This committee also oversees the company’s code of business ethics and corporate governance guidelines.
  • Disclosure Control Committee: The Disclosure Control Committee, among other things, implements, reviews and monitors Tesla’s compliance with applicable legal requirements governing public disclosures and public statements by the company and its officers regarding the company.

Remuneration philosophy: Tesla rewards its appointed top executives based on their performance, and stock awards weigh heavily in their total compensation, including awards that vest upon achieving clear and measurable milestones. These rewards increase in value as Tesla’s stock price increases, so the incentives for named executives are closely aligned with the long-term interests of the company’s shareholders. Tesla does not have a cash bonus program for any of its named executives and generally does not provide any perquisites or tax refunds to named executives that are not available to other employees. No named executive officer has any severance or change of control benefits except as reflected in Elon Musk’s performance-based 2018 CEO Performance Award.

Data privacy and cybersecurity: Tesla is legally guided by its obligations under global privacy laws and regulations, as well as customer expectations and its internal privacy principles.

  • Do the right thing with the data: The company maintains trust by treating data as customers expect, keeping it accurate and complete, and properly destroying it when no longer needed.
  • Build privacy into products from start to finish: Ensuring privacy is an important part of creating world-class products and services, from design to deployment and beyond.
  • Give customers choices about their data: Individuals are in control by providing clear and transparent ways to access, review, manage and delete their data.
  • Maintaining trust through transparency: The company is transparent about what personal data it collects and how it uses or shares it, so choosing a connected vehicle doesn’t come at the expense of customer privacy.
  • Backup of personal data: Tesla implements rigorous controls and standards designed to protect the security, privacy and integrity of its data environment.

Human rights: The ethical treatment of all people and respect for human rights are central to Tesla’s mission of a sustainable future. The company endorses and bases its definition of human rights on the United Nations Universal Declaration of Human Rights.

Final Thoughts

Tesla’s 2021 Impact Report describes how the company strives to be the best in every metric relevant to its mission to accelerate the global transition to sustainable energy. To maximize this impact, the company says it plans to continue to increase production volumes and the accessibility of its products. More concretely, this means that by 2030, Tesla aims to sell 20 million electric vehicles per year.

Tesla’s corporate governance is key on this path so that every metric is improved, including the energy and water used to make products, the safety of its customers and employees, and affordability and convenience. accessibility of the company’s products.

To note: All complaints come directly from the 2021 Tesla Impact Report.



Do you appreciate the originality of CleanTechnica? Consider becoming a member, supporter, technician or ambassador of CleanTechnica – or a patron on Patreon.


Have a tip for CleanTechnica, want to advertise or suggest a guest for our CleanTech Talk podcast? Contact us here.

Comments are closed.