In recent years, the concept of corporate governance has gained increasing importance in the business world. One key aspect of corporate governance is the board of directors role, which oversees the company’s management and ensures it acts in the shareholders’ best interests. However, this can be a difficult task, particularly when a company’s CEO holds multiple roles and responsibilities outside of their role as CEO. This is the case with Tesla’s CEO, Elon Musk.
Recently, a group of Tesla shareholders has written a letter to the company’s board of directors asking for more focus on Tesla CEO Elon Musk’s role in running the EV automaker. The group argues that Musk is not paying enough attention to the company’s issues, including competition from other automakers and allegations of a toxic work environment.
The letter was signed by Amalgamated Bank, Sisters of St. Joseph of Carondelet, United Church Funds, Investor Advocates for Social Justice, and the New York City Controller’s Office. The investors who signed the letter collectively own $1.5 billion worth of Tesla shares, which is less than 1% of Tesla’s shares. The letter does not call for Musk to be replaced as CEO but advocates for a board that will ensure Musk is focused on addressing the company’s challenges. Ivan Frishberg, chief sustainability officer at Amalgamated Bank, said the group is not advocating that Musk be replaced as CEO but that the board become less clubby and more responsive to investors.
Musk is essentially working for Tesla for free, and after being granted a final block of stock options from a 2018 pay package, there are no additional stock options that he can qualify for at the moment. Some analysts suggest Tesla announce a new pay package for Musk to assure Wall Street that Tesla is still his priority, but Frishberg disagreed, saying, “I don’t think throwing more money at the guy is the answer.”
The letter alleges that Musk’s attention is being spread too thin with his other CEO jobs, causing problems for Tesla, such as a high turnover rate among its staff. The investors signing the letter own less than 1% of Tesla’s shares, but they are concerned about Musk’s possible distractions, especially after purchasing Twitter and running SpaceX and other companies. The group is not calling for Musk to be replaced as CEO, but they are asking for a board that will ensure Musk is focused on addressing the company’s challenges.
While analysts suggest Tesla announce a new pay package for Musk, Frishberg disagrees and suggests the board become more responsive to investors.
Despite the differing opinions, it is clear that the investors want Tesla to have a board that will ensure Musk’s attention is focused on solving the company’s challenges.
