Written by Cláudio Afonso | LinkedIn | X
In a new SEC filing this Monday, eight shareholders filed a form with the SEC urging the voting against Tesla CEO Elon Musk’s compensation plan and also on the reelection of Kimbal and James Murdoch to the board.
The shareholders claim that Tesla is “suffering from a material governance failure which requires our urgent attention and action”.
The form was signed by eight shareholders including Amalgamated Bank, AkademikerPension, Nordea Asset Management, New York City Comptroller Brad Lander, SHARE, SOC Investment Group, UNISON, and the United Church Funds.
“Dear Tesla Shareholder, we write to you to urge you to vote AGAINST the reelection of directors Kimbal Musk and James Murdoch and AGAINST the ratification of CEO Elon Musk’s 2018 option award at Tesla’s AGM on June 13th,” the memo says.
“Last year, several of us wrote to the Board raising concerns regarding the dearth of independent directors and poor oversight. Since then, the governance, performance, and human capital management problems remain unchecked and further indications that investors must act to protect shareholder value have emerged. Even as Tesla’s performance is floundering, the Board has yet to ensure that Tesla (“Tesla” or the “Company”) has a full-time CEO who is adequately focused on the long-term sustainable success of our Company,” the shareholders claim.
The shareholders stated that earlier this year, the Delaware Court of Chancery revoked CEO Elon Musk’s 2018 mega pay package, citing the Board’s failure in oversight due to close ties to Musk and misleading disclosures about director independence.
“In January, a decision from the Delaware Court of Chancery (“Tornetta”) validated investor concerns that the Board has been captured and is not able or is unwilling to provide effective oversight of management. In her decision revoking CEO Musk’s 2018 mega pay package (the “2018 Pay Package”), Chancellor Kathaleen St. Jude McCormick found that the Board’s “extensive ties” to CEO Elon Musk led to a breach of fiduciary duty and that the prior “say-on-pay” vote was not “fully informed because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process,” it is stated in the form.
“Rather than heed the critiques of the court, Tesla has relied upon a one-person Special Committee of the Board, composed of Kathleen Wilson-Thompson, to reapprove the compensation plan, without advice from a compensation consultant or any new analysis, and is asking shareholders to restore the 2018 Pay Package at the upcoming meeting,” the shareholders said.
In the SEC form, they stated Tesla requires urgent attention and action, “In short, Tesla is suffering from a material governance failure which requires our urgent attention and action. As such, it is critical that shareholders reject Proposal 1, the renomination of Kimbal Musk and James Murdoch to the Board, and Proposal 4, ratification of the 2018 Pay Package, at the upcoming annual meeting of shareholders”.
Later in the form, investors claim “there is ample evidence that the Board is overly beholden to CEO Musk. Indeed, Delaware Chancellor McCormick concluded that “Musk operates as if free of Board oversight” “.
Written by Cláudio Afonso | LinkedIn | X
