Elon Musk is the outspoken CEO of Tesla as well as the company’s chairman. However, he could lose the latter title as the company has revealed shareholders will vote on a proposal to require the chairman of the board of directors be independent.
According to a proxy statement, the proposal was submitted by Jing Zhao who owns just 12 shares of the company. In his proposal, Zhao notes the current leadership structure – where one person can serve as chairman and CEO – might have been effective for Tesla in its early years. However, he contends the company is in a more highly competitive environment with rapidly changing technology so it is “more and more difficult to oversee Tesla’s business and senior management.”
The proposal is mainly focused on potential conflicts of interest and it specifically mentions Tesla’s acquisition of SolarCity in 2016. As the proposal notes, Musk was a significant shareholder in SolarCity and also it’s chairman. Zhao went on to note a similar situation with SpaceX as Musk is the company’s CEO and CTO. He also says Tesla board member Kimbal Musk sits on the SpaceX board and other members of Tesla’s board have an interest in SpaceX.
Unsurprisingly, Tesla’s board is recommending shareholders vote against the proposal. In a statement, the board said Tesla’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.” The board went on to say “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 Musk should continue to serve as Tesla’s chairman.
The proposal will be voted on during the company’s annual meeting of shareholders which takes place on June 5th.
