Elon Musk irks Tesla shareholders who call for more oversight
Shareholders concerned over 'meager oversight' of Musk, 'toxic culture' at Tesla
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A group of Tesla shareholders penned an open letter calling on the company's board to rein in billionaire CEO Elon Musk.
Seventeen major investors – holding more than $1.5 billion in Tesla shares – voiced their concerns about the direction of the company and its chief executive, who had said in February that he would not wish the pain of his current work week on anyone.
The shareholders said they are worried that the board is "failing to adequately represent the interests of Tesla’s shareholders."
"The board’s meager oversight of CEO Elon Musk and other critical aspects of corporate strategy, including the company’s approach to human rights and labor rights, exposes the company to substantial legal, operational and reputational risks, thereby jeopardizing its long-term value," the group said in the letter. "The board has allowed the CEO to be overcommitted at a time when the company faces critical challenges, including increased competition, regulatory scrutiny and a stock slide."
Still, Tesla shares have gained 27% this year, outpacing the S&P 500's 6.5% rise through Wednesday.
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They urged the board to announce a means to assure that the automaker has a chief executive that "dedicates adequate time and attention to the company" through either a policy or a succession plan and a plan to overhaul the composition of the board including "directors with close ties to the CEO."
The authors requested a meeting with the board to discuss concerns by May 25.
Twitter CEO Elon Musk speaks at the "Twitter 2.0: From Conversations to Partnerships," marketing conference in Miami Beach, Florida, on April 18, 2023. (Photo by CHANDAN KHANNA/AFP via Getty Images / Getty Images)
The shareholders asserted that the board has failed to make sure Musk is "appropriately focused on Tesla," leading to an "inability to address the multiple strategic and competitive issues facing Tesla." They cited losses in market capitalization and EV competition.
A charger with Tesla logo at a Supercharger rapid battery charging station for the electric vehicle company Tesla Motors, in the Silicon Valley town of Mountain View, California, on Aug. 24, 2016. (Photo by Smith Collection/Gado/Getty Images / Getty Images)
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Furthermore, they shared reports pointing to a "toxic culture at Tesla factories," noted that the company "appears to be embracing a broader culture of being ‘above the law'" and wrote that Tesla is "exposed to significant human rights risks" after opening a showroom in Urumqi, China.
Regarding the board, the letter claimed that it "lacks sufficient independence and accountability mechanisms," and that Tesla's current governance structure is a large part of the poor oversight of the board.
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"Due to the board’s failure to restrict the CEO’s outside commitments and ensure he is focused on solving the many challenges the company faces, we have lost confidence in its members," the correspondence concluded. "Without a fulltime CEO and a board willing to provide meaningful oversight, we are concerned that Tesla will not be prepared to effectively navigate the increasingly competitive environment for EV sales, the evolving global regulatory landscape, shifting consumer preferences, ongoing supply chain challenges and investors’ expectations.
Tesla did not reply to FOX Business' request for comment.