Musk Promises Two New Directors for Tesla Amid Shareholder Criticism
13 April 2017 - 9:51AM
Dow Jones News
By Tim Higgins
Chief Executive Elon Musk on Wednesday suggested the Silicon
Valley auto maker plans to add two independent directors,
responding to pressure from a group of shareholders complaining
about the electric-car company's governance.
The criticism came in a letter dated April 10 signed by five
investors including the California State Teachers' Retirement
System and CtW Investment Group, an arm of the union federation
Change to Win. It comes as Tesla's stock has soared in recent
months, pushing its valuation past that of Ford Motor Co. to a
level rivaling the market capitalization of General Motors Co., the
largest U.S. auto maker.
"As long-term investors, we want Tesla to succeed and believe
that the company will be most effective if it has the benefit of an
updated board and some good governance standards in place," the
letter said. It called for recruiting two new directors that don't
have prior personal or professional relationships with Mr. Musk and
eliminating the staggering of board elections.
Mr. Musk took to Twitter to push back, initially with a snarky
riposte saying "This investor group should buy Ford stock. Their
governance is amazing..." He added that Tesla had already committed
last year to adding more independent members during the process of
acquiring SolarCity Corp., where he had also previously served as
chairman prior. Asked on Twitter if two more members would be
appointed, Mr. Musk responded, "Yeah."
Tesla, unprofitable and in debt, faces many challenges to meet
Mr. Musk's ambitious goals, including bringing on a $35,000 Model 3
sedan later this year, boosting production to 500,000 next year
from about 84,000 last year and demonstrating a fully self-driving
car that can cross the U.S. by the end of this year.
In addition to Mr. Musk, who is chairman, Tesla's seven-member
board currently includes his brother, a former top executive for
SolarCity, two venture-capital investors, a private-equity
investor, and a telecommunications executive.
"The company faces many risks inherent in the execution of its
strategy, including the resolution of production challenges in the
face of expanding product lines, the successful integration of
SolarCity, and increasing competition from traditional car
manufacturers," the five investors wrote. "Given the current
context, we believe that, now more than ever, having a sound
governance foundation will aid in guiding the company as it
wrestles with these challenges."
An official Tesla statement said: "We regularly engage with our
shareholders and value their feedback. 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."
Write to Tim Higgins at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires
April 12, 2017 19:36 ET (23:36 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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