Tesla Shareholders Unhappy with Elon Musk’s Supervision

Elon Musk Faces Shareholders’ Concerns Over Tesla’s Oversight. The annual shareholder meeting of Tesla, marked by an increase in the company’s stock price, commenced on Tuesday afternoon. It was expected to serve as a referendum on the board’s supervision of the automaker and its CEO, Elon Musk.

In recent months, certain Tesla investors have expressed apprehension that the board has not adequately focused on the day-to-day requirements of the company under Mr. Musk’s leadership. These concerns have been fueled by a decline in Tesla’s share price, growing competition in the electric vehicle (EV) market, and Mr. Musk’s involvement with Twitter and SpaceX, his rocket company.

Chief Sustainability Officer Ivan Frishberg of Amalgamated Bank, an investor in Tesla, voiced his dissatisfaction, stating that it seems like the board is not effectively holding the CEO accountable. In April, the bank signed a letter calling on board members to improve their oversight of Mr. Musk, referring to it as “meager.”

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Amalgamated Bank intends to vote against Mr. Musk, board chair Robyn Denholm, and former Tesla Chief Technology Officer JB Straubel, all of whom are up for re-election. Tesla has nominated Mr. Straubel to succeed independent director Hiromichi Mizuno, the former chief investment officer of Japan’s Government Pension Investment Fund.

Tesla has not provided a comment in response to the request. In a pre-meeting video, Ms. Denholm described the board as “dedicated and engaged,” emphasizing their commitment to creating a governance framework that ensures management continuity and long-term value for shareholders.

The shareholder meeting, held at Tesla’s factory in Austin, Texas, follows the recent announcement of Linda Yaccarino as the new CEO of Twitter, a move that would allow Elon Musk to dedicate more time to Tesla.

Since the last annual meeting in August 2022, Tesla’s market value has decreased by nearly 50% due to lower interest rates and a less robust demand environment. The company’s first-quarter profit saw a decline of 24% due to recent price cuts. Tesla has indicated its intention to maintain an aggressive pricing strategy, which tests investors’ willingness to prioritize growth over profit.

In March, Tesla outlined plans to reduce production costs while highlighting the leadership team supporting Mr. Musk. Despite challenges, Tesla remains the world’s most valuable car company with a valuation exceeding $500 billion.

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The main items on the agenda include the election of Mr. Straubel and the re-election of Mr. Musk and Ms. Denholm. Proxy advisory firm Glass Lewis recommended shareholders vote in favor of Mr. Musk and Ms. Denholm but against Mr. Straubel, citing concerns over his independence. Tesla considers Mr. Straubel a co-founder, as he served as the company’s technology chief for over a decade.

Another proxy advisory firm, Institutional Shareholder Services, supported Mr. Musk and Mr. Straubel but recommended opposing Ms. Denholm’s re-election due to concerns regarding risk oversight and the policy governing the use of Tesla stock for personal loans.

A nonbinding proposal on the company’s executive compensation philosophy is also up for shareholder consideration.

Additionally, a shareholder proposal requests that Tesla prepare and maintain a report on key-person risk, highlighting the prominence of Mr. Musk and the need for clarity regarding succession planning. Tesla has advised investors to vote against this proposal.