Tesla’s Voting To See if Elon Musk Can Still Be Chairman and CEO
Move comes from an investor who’s not shy in making his voice heardby Kirby Garlitos, on
Elon Musk is under threat of losing his chairman role in Tesla if investor Jing Zhao has his way. The California-based investor has put a proposal on the table to vote on Musk’s ability to continue serving his role as chairman and CEO of the electric car brand. According to Zhao, Musk shouldn’t hold both roles anymore because the company is “now in a much more highly competitive and rapidly changing technology industry.” Zhao is arguing that it’s become more difficult for Musk to oversee Tesla’s business and senior management. As a result, he’s suggesting that an independent Board Chairman should take Musk’s place in order to eliminate potential conflicts down the road.
The man who’s calling for a vote to determine Elon Musk’s future role in the company has 12 shares of Tesla stock
There are perks to being a shareholder in a company like Tesla. One of those perks is having the right to make your voice heard at the annual shareholder’s meeting. It doesn’t matter how many shares you have because your voice and your votes count. In that vein, God bless Jang Zhao. The man who’s calling for a vote to determine Elon Musk’s future role in the company has 12 shares of Tesla stock. That’s 12 out of 168 million available shares, meaning the man owns 0.0000000714% of the total company value.
Regardless of his influence, Zhao isn’t taking his position lightly because he’s already submitted his proposal ahead of the annual shareholder’s meeting in June. “Although the current leadership structure, in which the positions of Chairman and CEO are held by one person, could provide an effective leadership for Tesla at the early stage, now in this much more highly competitive and rapidly changing technology industry, it is more and more difficult to oversee Tesla’s business and senior management (especially to minimize any potential conflicts) that may result from combining the positions of CEO and Chairman,” he said in his proposal. Zhao highlighted Musk’s involvement with SpaceX and Solar City as possible sources of future conflicts of interest, which he argues could hurt Tesla down the road.
As reasonable as he thinks his intentions are, it’s unlikely that anyone’s going to agree with him that getting rid of Musk as Tesla chairman is in the best interest of the company
On the surface, Zhao’s argument has its points. But don’t expect his radical proposal to gain a lot of traction among shareholders. It doesn’t help that, according to Electrek, he’s earned a reputation in the tech circle as being a shareholder activist who has a history of pushing for similar proposals at companies like Apple and IBM. As reasonable as he thinks his intentions are, it’s unlikely that anyone’s going to agree with him that getting rid of Musk as Tesla chairman is in the best interest of the company when Musk has basically held that position since the company’s inception in 2004.
Predictably, Tesla’s board has already released its own statement, expressing its opposition to his proposal.
“In light of the significant future opportunities for growth and the careful execution needed in order for the Company to achieve it, the Board believes that the Company is still best served by Mr. Musk continuing to serve as Chairman,” the board said. “Moreover, the role of the Lead Independent Director protects the Company against any potential governance issues arising from a non-independent director serving as Chairman. This position is vested with broad authority to lead the actions of the independent directors and communicate regularly with the Chief Executive Officer. Additionally, the Company now has seven independent directors following the addition of two additional independent directors in July 2017.”
Nice try, Mr. Zhao.
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