A group of investors wrote a lettercalling on Tesla to overhaul its board and to implement greater oversight over Elon Musk in response to the lawsuit that Musk and the company recently settled with the Securities and Exchange Commission.
The letter was sent by the CtW Investment Group – a “union-affiliated fund,” according to the Wall Street Journal– and included several U.S. state investment officials representing pension funds in New York City, New York state, Oregon, California and Connecticut. The letter was sent to Robyn M. Denholm, Linda Johnson Rice and James Murdoch – the three independent members of the board – asking for them to “commence a renewal of the board of directors.”
“Over the last two years, investors have sought to engage with the board on the issues that have led to the current crisis magnified by the SEC settlement,” they wrote. “While we appreciate that some investors had the opportunity to voice concerns during a call with Antonio Gracias in the spring of 2017, we have heard very little, if anything, from the board since then.”
Garcias is the “founder of Valor Equity Partners and an investor in several Musk ventures over many years,” as the Journal notes. The letter asks for the removal of Garcias, Elon Musk’s brother Kimball Musk and Steve Jurvetson – a venture capitalist and early investor in Tesla – “given the unexplained length of [Jurvetson’s] absence from the board.”
Jurvetson has been on leave from the board for 11 months. He was forced out of his namesake firm last year following accusations of sexual harassment.
Tesla has long been criticized for having a board of directors that is stacked with allies of Musk, calling into question its independence. The letter accused Tesla of having an “insulated board,” noting that while “meeting the technical definition of independence, five of eight current non-executive directors have professional or personal ties” to Musk.
As part of its settlement with the SEC, Musk is banned from serving as chairman of the board for at least three years and Tesla is required to nominate two additional independent members to its board. The investor group calls for Tesla to permanently separate the CEO and chairman positions, because “in light of recent events, it becomes even more important for the board to provide independent oversight and to ensure accountability for his actions.”
The SEC sued Musk and Tesla for “false and misleading public statements and omissions” that harmed investors and “caused significant confusion and disruption in the market for Tesla’s stock,” after Musk tweeted his desire to take his company private. Musk has also been sued by short-seller Andrew Left over the tweet (even though Left is no longer shorting Tesla).
Tesla has not yet issued a statement about the CtW Investment Group’s letter.
Photo: Getty iStock
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