When Tesla holds its 2018 Annual Meeting of Stockholders on June 5, shareholders will be asked to vote on a proposal by one stockholder that the company’s chair be an independent director, not Elon Musk, who has been chairman since 2004 and is also the chief executive officer.
Jing Zhao has notified Tesla that he is the beneficial owner of twelve (12) shares of the company’s common stock and intends to present a Shareholder Proposal on Board Chairman Independence, Tesla said in a proxy statement to its shareholders, recommending them to vote against this proposal. Zhao wants shareholders to vote on Tesla adopting a policy that the chairman be an independent director.
The shareholder Zhao argues in his proposal:
“Although the current leadership structure, in which the positions of Chairman and CEO are held by one person, could provide an effective leadership for Tesla at the early stage, now in this much more highly competitive and rapidly changing technology industry, it is more and more difficult to oversee Tesla’s business and senior management (especially to minimize any potential conflicts) that may result from combining the positions of CEO and Chairman.”
Tesla’s board, however, argues 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.”
“The Board believes that it is precisely during times when a company must quickly adapt to constant change and outside pressures that Board leadership needs to be lockstep with the Company’s operations. Our achievements to date notwithstanding, the Company is still at a point in its development where we must execute well in order to realize our long-term goals, and separating the roles of Chief Executive Officer and Chairman at this time would not serve the best interests of the Company or its stockholders,” said Tesla’s board.
By Tsvetana Paraskova for Oilprice.com
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