There’s now a group of investors in Tesla who are pushing the company to go above and beyond the SEC-mandated measures to shore up the company's corporate governance and board of directors. The group of investors, who urged the company that "shareholders need new stewards on the board" in a letter on Thursday, includes managers for Connecticut, Oregon, California and New York state and city pension funds. The group of investors also includes CtW investment group, a group affiliated with a federation of unions.
In their letter, the group details a series of actions they would like to see Tesla's Board of Directors take in order to not only help bolster oversight, but also to better hold the company's CEO, Elon Musk, accountable for his actions. The chief executive officer‘s recent tussle with the Securities and Exchange Commission has "added urgency" for the company to address this issue, according to a report on Yahoo Finance.
Of course, Musk is already now signatory to a settlement with the SEC that requires him to be replaced as chairman of the board while the company is also required to add two independent directors.
Collectively, the group of investors oversees about $774 billion in assets under management. They are seeking the release of a plan to refresh the company‘s Board of Directors and timelines for certain directors to leave. They also urged the company to take the SEC settlement a step forward by permanently separating the chairman and CEO roles in the future.
Aeisha Mastagni, a portfolio manager for the California State Teachers’ Retirement System, told Bloomberg: “There needs to be a complete overhaul of this board, and the new chair needs to be a strong, accomplished individual who can oversee Elon Musk.”
New York City Comptroller Scott Stringer, one of the letter signatories, stated: “Tesla is a sterling example of how insular boards fail companies and shareholders alike. A truly independent and refreshed board with directors from diverse backgrounds would be able to provide the strong oversight the company clearly needs.”
The group is seeking firm dates for when Antonio Gracias and Kimbal Musk will leave the Board of Directors. They also called for Steve Jurvetson to be removed after a year-long leave of absence. The investors also urged the company to find directors who have experience in the industry. As of right now, Robyn Denholm is the only person who has any experience in the auto industry, having previously worked as a finance manager for Toyota Australia.
Previous efforts to try and critique Tesla's Board have, for the most part, all failed.
In fact, one could argue that it has been the company’s decision to ignore these types of concerns in the past that may have helped lead Elon Musk into the "all powerful" position he believes himself to be in, regardless of whether or not it is putting him in a precarious position with regulators.
Whether or not the latest in a long string of letters and suggestions to the company by shareholders goes noticed also remains to be seen. Back in April 2017, several investors in this group were among an earlier group of investors who urged the company to add new independent directors. Separately, a group of Connecticut-based pension funds also pushed the company to move to annual director reelections, instead of three-year terms. This proposed measure was defeated. CtW, earlier this year, pushed to not re-elect three board members. Their campaign was defeated.