Tesla shareholders to vote on whether or not to remove Elon Musk as chairman

William Gayde

TS Addict
Staff member

Tesla shareholders will hold their annual meeting in June to vote on several key decisions for the company. One of those decisions is whether or not to keep Elon Musk as Chairman of the Board. The proposal is extremely unlikely to pass, but still highlights Tesla's mounting pressure to produce for its shareholders.

The idea was put forward by Mr. Jing Zhao of Concord, CA, a shareholder activist who has created similar proposals for Apple and IBM. His concern is that with Musk also involved at SolarCity and SpaceX, he may not be able to serve as an independent chairman.

Tesla was under pressure recently to add some independent members to its board, but this is the first call to remove Musk entirely. Part of the proposal reads as follows:

“An independent chairman of the board of directors is the prevailing practice in the international market, such as in the United Kingdom. In the United States too, many big companies already have or began to have an independent Board Chairman. Tesla should not be exception.”

This vote certainly doesn't mean Musk could be kicked out of his own company though; his contract as CEO was recently renewed for another 10 years. Tesla's statement on the issue unsurprisingly urges shareholders to vote against the proposal.

The Board believes that the Company’s success to date would not have been possible if the Board was led by another director lacking Elon Musk’s day-to-day exposure to the Company’s business. In light of the significant future opportunities for growth and the careful execution needed in order for the Company to achieve it, the Board believes that the Company is still best served by Mr. Musk continuing to serve as Chairman. Moreover, the role of the Lead Independent Director protects the Company against any potential governance issues arising from a non-independent director serving as Chairman. This position is vested with broad authority to lead the actions of the independent directors and communicate regularly with the Chief Executive Officer. Additionally, the Company now has seven independent directors following the addition of two additional independent directors in July 2017.

As CEO and Chairman of the Board, Musk has led Tesla along an impressive set of milestones, but not without some missteps. Their stock has tripled in the last 5 years but is down recently due to poor Model 3 production numbers and a tanking credit rating. Musk has since been sleeping on the factory floor ahead of their next milestone in June.

Although Musk's removal from the board seems unlikely, if Tesla misses the June production numbers, we may be seeing more and more proposals like this.

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yRaz

Nigerian Prince
What would they do such thing? Elon is running the company very well. watch out investors... a bad move on the market may mean huge Ls
Tesla has to start paying back on a loan and it's running a deficit. I love Tesla as a company but the fact is they are running in the red and Elon is to blame
 
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wiyosaya

TS Evangelist
This is why I would never have a publicly traded company.
Or just be like Zucc, and hold more than 50% of shares.
Even that will not guarantee that ducky will continue to be successful. Recent fiascos are mounting, who knows what more ducky will encounter that will potentially bring him to ruin. There is significantly more to running a company than holding 50%+ of the shares.
 

wiyosaya

TS Evangelist
What would they do such thing? Elon is running the company very well. watch out investors... a bad move on the market may mean huge Ls
Tesla has to start paying back on a loan and it's running a deficit. I love Tesla as a company but the fact is they are running in the red and Elon is to blame
Agreed.

As I see it, Musk, while appearing innovative, has been little more than a showman using off-the-shelf parts in a manner that makes him look innovative while other companies are working in the background. It will be interesting to see what those other companies produce.
 
What would they do such thing? Elon is running the company very well. watch out investors... a bad move on the market may mean huge Ls
Tesla has to start paying back on a loan and it's running a deficit. I love Tesla as a company but the fact is they are running in the red and Elon is to blame
Agreed.

As I see it, Musk, while appearing innovative, has been little more than a showman using off-the-shelf parts in a manner that makes him look innovative while other companies are working in the background. It will be interesting to see what those other companies produce.
So basically Apple's business model.
 

Uncle Al

TS Evangelist
Having a combined CEO and board Chairman removes an essential check & balance from the corporation. While it has become popular in recent years it has also lead to some outrageous behavior in a few corporations as well as escalating salary & bonus structures. No corporation needs an executive that can work two years then retire on salary and bonuses. Corporations thrive when the CEO is dedicated for the long run and stays to enjoy the successes as well as the failures. While Musk has performed well in some regards he has also failed miserably in others, not unlike many executives.
 
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p51d007

TS Evangelist
THIS is why you should stay PRIVATE. It's hard to raise funds, I get that, but once you become public, some shareholder will gobble up enough shares, and oust the head. Look what they did to Apple when Sculley took over.
 

MilwaukeeMike

TS Evangelist
Money grabbing shareholders only interested in lining their own pockets...
And care nothing for the actual products being created.
That's like accusing a customer at a restaurant of only caring about the food. The whole point to being a shareholder is to make money.

It works like this... a company wants to keep growing, but go figure - no one will just give them money for free. So instead the company sells it self off piece by piece to many different people. Each piece is a 'share' and the end result is the company has money to grow, and the shareholders (hopefully) get some money in return for buying the shares as the company grows.

THIS is why you should stay PRIVATE. It's hard to raise funds, I get that, but once you become public, some shareholder will gobble up enough shares, and oust the head. Look what they did to Apple when Sculley took over.
Fair point, but Telsa is worth almost $50 billion. There are very few people in the world rich enough to buy 51% of Tesla, and no one is dumb enough considering they were worth like $60 billion a few months ago.
 
B

bmw95

Yeah that's the sad part about having a public company. Legally you're obligated to your shareholders (which makes sense), which can't take a dark turn when a company is going through tough times.

I wonder if it would be useful for Elon to find a small network of close friends who share his enthusiasm for product development and are great at coming up with successful ideas. It seems that he's trying to do too much on his own, especially at the pace he's trying to grow the companies. It's understandable why he's doing that, but he might end up in the hospital if it goes for too long :(

I think there's a lot riding on the success of Tesla and SpaceX, and if either of them fail, that could cause a ripple effect in the tech industry.
 

Abraka

TS Addict
As usual, banks are ruining everything. One of the main rules of success: NEVER TAKE A LOAN.
Find venture capital, use crowd funding, use other options but NEVER, I mean NEVER TAKE A LOAN. That's a sure way to abyss. Never have anything with the banks, outside having an account (and only because we're forced by the law).