Tesla board members are facing shareholder scrutiny as the company struggles to contain costs while ramping up production of its Model 3 electric sedans.
Last week, a pension fund adviser called the CtW Investment Group sent a letter to Tesla shareholders urging them to vote against the re-election of three of its board members. The letter makes the argument that Tesla’s board is packed with people who lack independence from chairman and CEO Elon Musk, or lack useful automotive industry knowledge.
Specifically, CtW wants shareholders to vote out Valor Equity Partners founder Antonio Gracias, restaurateur Kimball Musk, and media executive James R. Murdoch from the Tesla board.
Gracias invested in PayPal, where Musk first made his fortune, as well as SolarCity, which Tesla bought in 2016. He still has a major stake in another Elon Musk-run company, SpaceX, where he is a board member and director.
Kimball Musk is Elon Musk’s brother and a restaurateur by trade. And James Murdoch is the CEO of 21st Century Fox, but lacks any automotive or engineering experience.
In its letter, CtW lamented that Tesla’s losses increased to 19% of revenue in its most recent four quarters, and that the company’s cash burn has accelerated over this period, too. Different board members could have helped Tesla avoid these losses, they suggested, and may be needed to help Tesla improve its operations in the future.
A separate proposal seeks to remove CEO Elon Musk from his chairman role on Tesla’s board. An individual shareholder named Jing Zhao, who owns just 12 shares of common stock in Tesla, initiated this proposal, which shareholders will vote on in June.
In its most recent quarterly report, Tesla maintained this risk statement:
“We are highly dependent on the services of Elon Musk, our Chief Executive Officer, Chairman of our Board of Directors and largest stockholder. Although Mr. Musk spends significant time with Tesla and is highly active in our management, he does not devote his full time and attention to Tesla. Mr. Musk also currently serves as Chief Executive Officer and Chief Technical Officer of Space Exploration Technologies Corp., a developer and manufacturer of space launch vehicles, and is involved in other emerging technology ventures.”
Read the Ctw Investment Group letter in its entirety, here.