These shareholders want their voices to be heard.
Elon Musk has a lot going on these days between running his space company, SpaceX, and running his social media platform, Twitter (TWTR) – Get a free reportand runs the golden goose that finances all of his further adventures, Tesla (TSLA) – Get a free report.
Now a group of shareholders says Musk’s big board is hurting Tesla’s growth, and they’re not taking it anymore.
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Corporate boards can and should step in if a CEO appears distracted or overly focused on other projects. However, the board has allowed Elon Musk to run so many companies, resulting in an inability to address the multiple strategic and competitive issues facing Tesla. , ” the letter States.
The long-term investor group owns more than $1.5 billion in Tesla stock and says the company’s board has allowed Musk to be “overcommitted” to his other projects while Tesla is at a critical juncture in its development.
Last week, Tesla shares took a hit after the company reported its weakest profit margin in more than two years, while adjusted earnings fell more than 20% year-over-year.
The letter estimates that Tesla has lost $582.4 billion in market value since Musk first disclosed his stake in Twitter on April 4, 2022.
More than just attacking Elon, shareholders are going after Tesla’s ultra-governing structure.
“We believe that Tesla’s current governance structure—specifically its tiered elections, supermajority voting requirements, board composition, and director compensation practices—is a major reason for its weak oversight,” the letter states.
“In addition to his brother Kimbal Musk, CEO Elon Musk has longstanding friendships with directors Ira Ehrenprice and James Murdoch… We are concerned that these close personal relationships and unusual remuneration diminish the boards’ objectivity, independence, and ability to prioritize the needs of Tesla and its shareholders.”
Signatories to the letter include institutional investors Amalgamated Bank, Nia Impact Capital, the New York City Comptroller’s Office, and the SOC Investment Group, among others.
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