For many years, Tesla's board was almost invisible and held behind the curtain as superstar and CEO Elon Musk ruled the electric car manufacturer for large share price increases. Now, given Musc's recent dubious behavior, experts say it's time for the board to go on stage and take steps on the company's leadership.
The list of Musk offenses includes reporting Wall Street analysts on a conference call and marking as pedophile via Twitter, a British diver involved in the cave rescue of caught Thai footballers.
Add that his quick Twitter announcement about a plan to take the company privately even though the funding has not been solidified, as well as confess to being overwhelmed with job stress in a recent interview and it is likely that most other corporate boards in A similar position would have taken action, "says company management experts.
Yet, Teslas's nine members, including Musk and his brother Kimbal, have largely been silent, save to form a three-member committee to decide on go-private plans that have already drawn a review from US securities regulators.
At least five of friends Some of the eight non-executive directors have strong ties with Musk or one of his other companies and cast doubt on independence.
"I think Elon Musk is a genius and he must be admired and encouraged, but this board has to do more management supervision by the company. The board is not meant to be a jubilee committee," said William Klepper, professor at Columbia Business School and an expert on corporate governance issues.
Kimbal Musk is one of the five board members of Musk. Managing Director Antonio Gracias is a private equity firm and is also the director of SpaceX, Musk's private-owned rocket company. Director Steve Jurvetson is also a SpaceX director. He has been on leave by venture capital company since allegation of sexual misunderstanding appeared last year.
Another director, venture capitalist Ira Ehrenpreis, is also a SpaceX investor, while director Brad Buss is a former CFO of SolarCity, a solar panel panel maker Tesla bought in 201
The Australian Telecom Company's CEO Robyn Denholm was the only other Tesla dir the eighth of last year when two were added after investors complained of lack of independence. James Murdoch, Managing Director of 21st Century Fox, and Linda Johnson Rice, Managing Director of Johnson Publishing Co., joined the board in July 2017.
In a letter from 2017 seeking two more board members, five investors wrote that Five Tesla Directors "have professional or personal ties to Mr. Musk who may risk their ability to exercise independent judgment."
One of five New York City Comptroller Scott Stringer, who manages investments in Tesla, said in a statement Monday that it's time for the board "to take a tight look at Tesla's management and compensation structures to make sure there's a right processes in place for strong board independence and supervision. "
Columbia's Klepper said that Tesla did not need more board members; it needed assertive ones. "They must make some hard choices about existing board members and decide if their expertise really fits with Tesla's mission," Klepper said.
Two major companies specializing in corporate governance issues, Tesla recommended shareholders to tear up the company's board earlier this year, referring to worrying conflicts of interests and decisions that raised questions about the board members' links with Musk.
Shareholders closed to reject the recommendations of Institutional Shareholder Services and Glass Lewis & Co. at Tesla's annual meeting in June and all three directors – Gracias, Murdoch and Kimbal Musk – were re-elected – whose terms expired.
Glass Lewis recommended to vote against the three; ISS opposes the re-election of Gracias and Murdoch, but concluded that there was no reason to exercise Kimbal Musk because he did not earn any board committees requiring independence from his brother.
Tesla would not comment on its board members, and Members reached Monday did not return messages. But the company pointed out its power of attorney statement saying that seven out of nine members are considered independent based on the standards stipulated by the Nasdaq stock market, which Tesla shares are about. The company said that Ehrenpreis and Gracias do not own spells in Tesla.
Tesla's warehouse has been on a roller coaster since Musk used Twitter on August 7 to say he considered taking the listed company privately. Although Musk said that funding had been secured for what could be at least a $ 20 billion deal, the company later announced that it was not. On the day of the announcement, shares rose by 11 percent, but since it has fallen almost 19 percent, Monday ended at $ 308.44.
Musk showed that he tweeted the proposal while driving to the airport – without anyone else seeing or evaluating the post. He later wrote that he announced the board on August 2, and that the board met two times before the announcement.
Experts say under more common circumstances that the board of directors would have considered the plan before it was published, indicating that Tesla Tesla, which started selling shares to the public in 2010, has a management structure that looks more like a startup than a company with 11 , $ 76 billion in sales and sales of 101,000 vehicles. last year experts say.
Musk is the Chairman, CEO and "Product Architect", and the company has no board members, a position that would typically exist to run day-to-day operations and let the CEO focus on larger image ideas. Although Steve Jobs in Silicon Valley titanium Apple Inc. had a CEO and was heavily involved in product development while living, but left the daily operation of the company to Tim Cook, when the company's COO.
Tesla's problems are reinforced by the fact that Musk shares its time as head of Tesla and at least three other ventures.
"Musk can not be all things at all times," Klepper said.
Charles Elson, director of Corporate Governance Center at the University of Delaware, said the board has a duty to assess whether Musk could lead the company given its confession last week to The New York Times that the job took twelve on his personal health.
"It paints a picture of someone who is deeply concerned," Elson said. "Managing a business is hard enough. Finding yourself in that state of mind is something different. "
With a normal rule and normal corporate governance, Musk would have been gone already, Elson said.
" People have been moved too much less, "he said.
Michael Liedtke contributed from San Francisco. Cute reported from New York while Krisher reported from Detroit.
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