At its 2026 annual meeting, Tesla will give shareholders the option to enroll in what it is calling a “Voluntary Retail Voting Program,” which the technology giant claims will “enhance retail shareholder participation and facilitate voting at shareholder meetings.”
Information available to shareholders states, “If you enroll, you will be giving Tesla a standing instruction to vote your shares at future meetings. You will continue to receive proxy materials for all future meetings and will still have the opportunity to vote at any future meeting. However, if you do not choose to vote at a future meeting, your shares will still be represented and will be voted in accordance with your standing instructions.”
The “standing instructions” the company talks about are limited to choices that do not allow you to vote against Tesla’s Board of Directors. The company states, “You will have two choices. The first is to have your shares voted with the recommendations of Tesla’s Board of Directors on all matters. The second is to have your shares voted with the recommendations of Tesla’s Board of Directors on all matters except any contested director election or any acquisition, merger or divestiture transaction that, under applicable state law or stock exchange rules, requires approval of Tesla’s shareholders (each, a “Special Matter”). You also will have the choice to opt out of the Voluntary Retail Voting Program. If you enroll, you will remain in the Voluntary Retail Voting Program until you opt-out.”
So, the latest technological advancement from Elon Musk’s Tesla is a voting system that locks shareholders into voting with the board on all matters into the future, without even knowing what those future issues will be? That’s an interesting spin on “good governance”—or is it? It’s questionable whether shareholders even want an auto-voting system of any kind. Corporate board members will likely be watching to see what percentage of Tesla shareholders enroll in the Voluntary Retail Voting Program.
If directors at other companies are considering whether an auto-voting system could be implemented at their organization, besides asking whether it would be good for governance, there are many other questions that should be asked:
Does your CEO and board have enough good will to float the auto vote idea to shareholders? The corporate culture and board structure at Tesla is far different from most companies. CEO Elon Musk has the full support of the Tesla Board, and his reputation as a “genius” and richest man in the world give him standing with investors that other CEOs can’t match. Musk’s success with his many businesses has many shareholders willing to go along with almost anything he wants to do because they’ve benefitted from his stewardship in the past. Companies that do not have such a stellar track record of growth may have a tougher time selling shareholders on voting with the board on all matters into the future.
What is the potential for backlash from shareholders? The idea of auto-voting will not sit well with some shareholders and may prompt them to protest. Picket line protests or campaigns in the media will bring negative attention to the company which may affect stock price. Board members that push the idea of auto-voting may become targets to be voted off the board.
Why would your company need auto-voting in the first place? Tesla claims its Voluntary Retail Voting Program is a tool to “enhance retail shareholder participation and facilitate voting at shareholder meetings.” They are making it seem like it benefits shareholders. Can your company make the same claim? Some of the largest shareholders at other companies might want to maintain the ability to lobby retail shareholders on important issues in the future.
