 "Elon Musk")
- Dana Hull
A group of Tesla investors has accused the company of mismanagement and is seeking a meeting with its board to discuss the performance of Chief Executive Officer Elon Musk.
The 17 shareholders, who hold more than $1.5 billion of Tesla stock, said Musk is distracted by his commitments to other companies and must be reined in, according to an open letter they sent to Chairwoman Robyn Denholm and Director Ira Ehrenpreis Friday.
They want the board to come up with a plan to do so and seek to remove directors too closely tied to the CEO.
“There is collective frustration,” said Ivan Frishberg, the chief sustainability officer for Amalgamated Bank, which has 722,070 shares in Tesla across its various funds.
“Over the last year, it became quite clear that Tesla suffers from a governance problem.”
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Amalgamated Bank, New York City pension funds, and other signatories to the letter want Musk to focus so he can navigate the increasingly competitive EV market and regulatory scrutiny.
The carmaker is now worth half its $1.2 trillion market cap on April 4, 2022, when Musk first disclosed his stake in Twitter, the investors pointed out. He ultimately bought the social media company and has run it since October.
“It is unprecedented to be a CEO and also be running two other companies at the same time,” said Courtney Wicks, executive director of Investor Advocates for Social Justice, which represents several faith-based investors. “I can’t imagine any other board allowing a CEO to have as many outside business activities.”
Earlier this year, another Tesla investor — who isn’t associated with the letter — filed a resolution asking the company to create a plan to address its reliance on Musk. Tesla’s board has recommended shareholders vote against the proposal at the company’s May 16 annual meeting. This year’s proxy contains just one resolution, down from eight in 2022.
The letter goes on to a list of series of other issues the investors argue put the company at risk. Among them: the company’s litigation with the state of California over the treatment of Black employees at Fremont factory, the use of mandatory arbitration and the termination of employees who were involved in a union organising effort in New York.
The group also criticised Tesla for opening a showroom in Urumqui, the capital of the Xinjiang Uyghur Autonomous Region in China.
Tesla bumped up each variant of its high-end models by $2,500, raising the cost of the sedan and sport utility vehicle by 2 to 3 per cent. The Model S and X now start at $87,490 and $97,490.The move claws back some of the steep price cuts imposed earlier this year, which have squeezed profit margins. Tesla shares traded up less than 1 per cent on Friday in New York. The automaker’s operating margin shrank to 11.4 per cent in the first quarter.
- Bloomberg
