Share

Tesla board shakeup seen as 'important step' in governance

Tesla will bid farewell to longtime directors and reduce the size of its 11-member board to nine as the automaker ushers in a new era of corporate governance.

Director terms will be cut to two years from three, allowing shareholders to vote on the board’s performance with greater frequency, according to a proxy filed Friday.

Directors Brad Buss, former chief financial officer of Solarcity, and Linda Johnson Rice, chief executive officer of Johnson Publishing, won’t seek re-election when their terms expire at the June 11 annual shareholder meeting.

If shareholders vote to reduce director terms to two years, venture capitalist Stephen Jurvetson - who returned from an extended leave of absence this month - has indicated he would not seek re-election in 2020. Antonio Gracias, a private equity firm founder, has also indicated he wouldn’t stay on Tesla’s board after his term ends next year.

'Fresh air to the Board'

Buss, Gracias and Jurvetson have long been associated with Tesla CEO Elon Musk. Gracias and Jurvetson are both on the board of the billionaire’s closely held SpaceX.

“It strikes me as an important step towards more effective corporate governance,” said Stephen Diamond, an associate professor of law at Santa Clara University. “I would call this a board shakeup. The trio of Buss, Gracias and Jurvetson are the heart of the Musk crowd and the old boy network. Maybe this will bring some fresh air and light into the board.”

Jurvetson and Gracias should retire this June as opposed to waiting until 2020, said Dieter Waizenegger, executive director of CtW Investment Group, which works with union pension funds that are Tesla investors. Jurvetson went on leave in November 2017, and is just returning after being away for nearly 18 months, while Gracias faced some investor opposition last year.

“This is a first good step, but there’s more work to do,” said Waizenegger. “Tesla should look for people who have really strong manufacturing expertise.”

'Supermajority Amendment'

Tesla is also proposing to eliminate the “Supermajority Amendment,” which requires the approval of two-thirds of shares to make certain major changes to the electric-car maker. Instead, a simple majority would suffice.

The news, released on the afternoon of the Good Friday holiday when the US stock market was closed, comes ahead of a busy week for the company. On Monday, Tesla will host an “Autonomy Day” for investors to showcase its progress with its driver assistance feature known as Autopilot. The company reports first-quarter earnings on Wednesday.

Musk and the US Securities and Exchange Commission have until April 25 to resolve their legal fight over the CEO’s penchant for tweeting, after both said they needed more time.

Tesla’s other board members are chairman Robyn Denholm, Ira Ehrenpreis, Larry Ellison, James Murdoch, Kimbal Musk and Kathleen Wilson-Thompson. Ellison, co-founder of Oracle, and Wilson-Thompson, global human resources chief at Walgreens Boots Alliance, joined Tesla’s board in December.

Tesla shares have plunged 18% this year, compared with a 21% gain in the Nasdaq Composite.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.96
-0.1%
Rand - Pound
23.92
-0.1%
Rand - Euro
20.43
+0.0%
Rand - Aus dollar
12.35
-0.0%
Rand - Yen
0.13
-0.1%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders