Major Tesla shareholders are pressing the Board of Directors to evaluate the CEO’s performance in an open letter released on April 21.
Leadership concerns
The 17 shareholders with over $1.5 billion of Tesla stock accuse CEO Elon Musk of mismanagement due to his many other commitments, particularly in Twitter, SpaceX, and The Boring Company. They seek a meeting with the Board by May 25, 2023, as they aim to discuss their worries and demand solutions.
“The Board has allowed the CEO to be overcommitted at a time when the company faces critical challenges, including increased competition, regulatory scrutiny, and a stock slide.
Corporate boards can and should intervene if a chief executive appears distracted or overly focused on other ventures.”
Tesla Investors wrote in the letter
These concerns are not surprising given CEO Elon Musk’s recent ventures. Its SpaceX Starship exploded in mid-air during its first test flight. Meanwhile, Twitter introduced its new “blue check system” to mostly derision. On the other hand, Tesla suffered a share decline of 9.75% and an earnings decline of more than 20%.
Consequently, his personal wealth significantly dropped by $13 billion following this series of business missteps.
All that said, the shareholders claim that the Board’s lack of control over CEO Elon Musk and Tesla’s other corporate strategies has been “jeopardizing its long-term value.”
Proposed actions
The shareholders have urged the board to act to ensure that Tesla has a CEO who devotes enough time and attention to the company. Along with changing the Board’s composition, they urged that any directors with close ties to the CEO be sacked.
The investors further noted that such a strategy is necessary since Tesla is gradually losing its share in the market for high-performance EVs.
“Without a full-time CEO and a Board willing to provide meaningful oversight, we are concerned that Tesla will not be prepared to effectively navigate the increasingly competitive environment for EV sales, the evolving global regulatory landscape, shifting consumer preferences, ongoing supply chain challenges, and investors’ expectations.”
Tesla Investors wrote in the letter
Its own investors and industry professionals have long criticized billionaire Elon Musk’s position as Tesla CEO. In fact, this issue was brought up in a trial last year about Musk’s pay package.
According to a former Tesla board member Antonio Gracias’ remark, the Board has occasionally considered the option of replacing the CEO. However, they were unsuccessful.
“We couldn’t find anyone.” Gracias stated.
Former Tesla board member Antonio Gracias
See Also:
- Elon Musk explains how Tesla values “investors” on Investor Day
- Tesla CEO Elon Musk claimed, Twitter is ‘Trending to Breakeven’ following a bankruptcy warning
- CEO Elon Musk prioritizes Tesla over Twitter, per internal notes
- Tesla shares fell 28%, since CEO Elon Musk’s Twitter acquisition
- Elon Musk’s Twitter stunts have a negative effect, said Tesla (TSLA) investors
Now, Tesla investors are seeking a meeting with the Board to raise concerns regarding the company’s current management and their recommended solutions.
You can access the investor’s letter below:
