A group of Tesla shareholders questioned the independence of board members present in the Tesla board in a letter to the company, warning that the board was too close to co-founder and Chief Executive Officer Elon Musk. The letter, which was signed by five shareholders, said that the board was largely changed since the company went public and it was at “risk of groupthink.”
Tesla shareholders question the independence or lack thereof in Tesla Board
Mr. Musk said in a tweet that the investors should “buy Ford stock” instead. The five shareholders, who collectively manage assets worth $721bn (£547.5bn), urged the electric car making giant to re-elect members yearly and to add at least two new independent directors, who have no close connection to Elon Musk, to the board.
The shareholders include Hermes Equity Ownership Services, the California State Teachers Retirement System, and CtW Investment Group, among others. The letter, which was sent to Tesla lead independent director Antonio Gracias, called for action before the car making company released its Model 3 sedan later this year.
The letter said, “While meeting the technical definition of independence, five of the six current non-executive directors have professional or personal ties to Mr. Musk that could put at risk their ability to exercise independent judgment.” Further it said, “A thoroughly independent board would provide a critical check on possible dysfunctional group dynamics, such as groupthink.”
Buy Ford Stock instead: Elon Musk
Just like any other day, the CEO of Tesla used the micro-blogging site ‘Twitter’ to show his frustration with the investors of Tesla. He said that there was “stormy weather in ShortsVille”, referring to the surge in stock of Tesla. The tweet was a dig to those investors who believed that the value of the electric car maker would fall and to those investors who sold their stock.
Musk tweeted on Wednesday that the investment group should purchase stock of Ford Motors instead of Tesla Motors if they wanted a different corporate culture. The board members of Tesla Motors include Brad Buss, an Ex-chief financial officer at solar power business SolarCity; Mr. Gracias, a shareholder and board member of SpaceX; Kimbal Musk, brother of Elon Musk and several others.
A Tesla spokesman said that the company engaged with shareholders regularly and valued their feedback. He said, “We are actively engaged in a search process for independent board members, which is something we committed to do several months ago, and expect to announce new additions fairly soon.”