Close  

Tesla wants to cut size of board from 11 directors to 7

/ 05:49 PM April 21, 2019
Tesla breaks ground on factory in Shanghai

In this April 22, 2014, file photo. Tesla Motors CEO Elon Musk, right, looks on as a set of Tesla Model S sedans are delivered to its first customers in China at an event in Beijing. AP FILE PHOTO

PALO ALTO, California — Tesla plans to cut its board of directors from 11 to seven in a move the electric-car maker says will allow the board to act more nimbly and efficiently.

Tesla says the four directors who will depart aren’t leaving because of any disagreement with the company.

ADVERTISEMENT

The board has come under closer scrutiny since August, when CEO Elon Musk tweeted that he had lined up funding and was considering taking the Palo Alto, California-based company private at $420 per share. That didn’t happen, and regulators accused Musk of securities fraud.

Tesla disclosed the upcoming changes to the board in regulatory filings Friday.

Brad Buss, a director since 2009, and Linda Johnson Rice, who joined the board in 2017, plan to leave at the annual meeting in June. Two early Tesla investors, Stephen Jurvetson and Antonio Gracias, plan to leave next year if shareholders agree to shorten Gracias’ term by a year.

“This shakeup of the board has been long overdue,” said Stephen Diamond, a corporate-governance expert and associate law professor at Santa Clara University who has urged changes in oversight at the company. “It is a very important step towards greater accountability to Tesla’s owners, the public shareholders, because it breaks up the old-boys network around Elon Musk.”

The shareholder meeting is June 11 in Mountain View. Shareholders will vote on other proposals that the company says will improve its corporate governance, including shortening directors’ terms from three years to two years, and dropping a supermajority voting requirement.

The changes are the latest moves by Tesla in response to criticism that the board has lacked independence from the company’s mercurial CEO.

ADVERTISEMENT

The Securities and Exchange Commission sued Musk last year, accusing him of misleading investors by falsely claiming in a post to his 22 million Twitter followers that he had arranged funding to take Tesla private.

The SEC sought to remove Musk as CEO, but the two sides settled with Tesla agreeing to pay $40 million and have Musk step down as chairman for at least three years. In December, Tesla named two independent board members as part of the agreement.

Tesla Inc. shares closed Friday at $273.26 after a gain of $2.03. They have fallen 18% this year and 29% from their peak on Aug. 7, when Musk made his going-private tweet.

Read Next
LATEST STORIES
MOST READ
Don't miss out on the latest news and information.
View comments

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: Business, cars, Elon Musk, Tesla
For feedback, complaints, or inquiries, contact us.



© Copyright 1997-2019 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.