A group of Tesla shareholders which owns over $1.5 billion in company shares, has written to the board of directors expressing concerns over governance and leadership issues citing its “meagre” oversight of CEO Elon Musk who is “overly focused” on other ventures.
In the April 21 letter, the investor coalition stated that 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 dissident shareholder group added that it believes the board has allowed Musk to be “overcommitted” at a time when the company faces challenges including increased competition, regulatory scrutiny, and a stock slide.
In the period since Musk first declared his stake in Twitter on April 4 last year until April 3, 2023, Tesla has lost $582.4 billion in market capitalization, the letter cited while referencing his roles as the founder, CEO, and chief engineer of SpaceX; the CEO and product architect of Tesla; the founder of The Boring Company; the co-founder of Neuralink and OpenAI; and the owner and CEO of Twitter.
The alliance has urged Tesla’s board to either introduce a policy that ensures Musk dedicates adequate time and attention to the company by restricting his outside commitments or introduce a CEO succession plan. It has also recommended introducing a plan to overhaul the board and remove directors with close ties to the CEO.
The investor coalition is comprised of Amalgamated Bank, AP7, Sisters of St. Joseph of Carondelet, Albany Province, Friends Fiduciary Corporation, Investor Advocates for Social Justice, NEI Investments, Nia Impact Capital, Nordea Asset Management, NYC Comptroller’s Office, PensionDanmark, SHARE, Sisters of the Good Shepherd, SOC Investment Group, Socially Responsible Investment Coalition, The Dominican Sisters, Grand Rapids, Tulipshare, and United Church Funds.
The 17 investors have requested a meeting with the electric car manufacturer’s board to discuss its concerns and requested remedies by May 25.
Since the beginning of 2023, Tesla’s share price has risen by 52.71% to $165.08 as of market close on April 21. However, the share price has tumbled by over 50% in the past 12 months.