Tesla is going to be holding its annual shareholders meeting next week and it might be an unusual one since the company’s board has been receiving a higher than usual amount of pressure from its shareholders.
Some board members are up for reelection and some shareholders have been campaigning to have them removed.
Now Tesla issued a new document trying to justify their positions on the company’s board.
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Tesla’s shareholder’s meeting generally starts with the official items, which are normally only uncontroversial formalities, after that, Elon Musk generally comes on stage for a quick presentation and then he answers questions from shareholders.
Next Tuesday, the company will go through the same process, but official items are a little more controversial this time.
As previously reported, shareholders will have to vote on a proposal that would see Musk being removed as Chairman and they will have to decide on the reelection of three board members.
Normally, the reelection of board members at Tesla is only a formality with the only hiccup being some shareholders asking the company to add independent board members, which it eventually did.
But this time, CtW Investment Group, an activist shareholder group, has been campaigning to have the three board members removed and it received the backing of two proxy adviser firms.
Last night, Tesla responded by sending a document to shareholders in which they tried to justify the reelection of the three board members.
In the case of Antonio Gracias, a longtime Tesla board member, CtW has been complaining of his close relation with CEO Elon Musk through his investments in Musk’s other companies and they claim that he doesn’t have valuable experience to sit at the board of an automaker.
Furthermore, they had issues with a payment of $34,000 that Tesla made to his investment firm Valor.
In the document sent to shareholders last night, Tesla explained that the payment was for the reimbursement of expenses after Valor’s “senior operations team spent more than 100 days at Gigafactory 1 to help create numerous improvements that led to increased Model 3 production rates.”
The company states that Valor refused payment for this service, but they accepted reimbursement for travel and lodging costs to stay near Gigafactory 1 during the project.
Tesla also argued that Gracias has valuable factory experience and he was previously the CEO of an auto parts company.
Aside from Gracias, Tesla also issued a few comments about James Murdoch, CEO of 21st Century Fox and Tesla’s newest board member, and Kimbal Musk, co-founder of the Kitchen and a longtime Tesla board member.
You can read the comments in full in the document sent to shareholders:
I always find these things to be a bit silly, but I am still curious to see how shareholders will vote.
I doubt Gracias, Elon and Kimbal Musk will have any issue since they have been with Tesla for a long time and the company had quite a lot of success during that time.
With this said, I am not so sure about Murdoch.
In Tesla’s justification for his role on the board, they said that he is an “experienced chief executive who has scaled and run operations at large successful companies, including in global markets throughout Asia, Europe, and the Americas.”
Then they go on to list a weird series of subsidiaries affiliated to Fox that Murdoch was responsible for at some point.
Obviously, Murdoch was in charge of those companies through nepotism for being the son of media mogul Rupert Murdoch.
I can’t hold that against him since nepotism is rampant in all industry and it doesn’t necessarily mean he is not competent, but that particular industry is truly not relevant to operating Tesla and on top of it, what he is best known for in this industry is the phone hacking scandal while he was in charge of News of the World.
Due to all that, I think Murdoch will have a tougher vote, but I will still be surprised if he doesn’t go through since so many shareholders simply vote with the board.
What do you think? Let us know in the comment section below.