Tesla’s annual meeting this year might have a little more drama because an investor services firm is recommending a board shake-up at the electric vehicle maker.
Tesla (ticker: TSLA) will hold its 2021 annual meeting on Oct. 7, virtually, from its new factory being built in Austin, Texas. The auto maker filed its proxy materials — the list of business to be done by shareholders — late last week. The proxy includes the list of board members to be voted on at the meeting.
Institutional Shareholder Services, or ISS, is a large proxy advisor and made a splash recently recommending Tesla shareholders vote against board members Kimbal Musk and James Murdoch. Proxy advisor firms provide recommendations to their clients on how to vote.
Kimbal Musk is Elon Musk’s brother. James Murdoch is the son of media mogul Rupert Murdoch, the executive chairman of News Corp, which owns Barron’s. ISS questioned Kimbal Musk’s and Murdoch’s ability to provide independent advice in the light of sizable equity grants made to both men. With too much financial skin in the game, they might not be able to be independent.
ISS and Tesla weren’t immediately available to comment.
Board independence is a significant issue, but it’s a long-term issue and the recommendation shouldn’t be large for Tesla stock in coming months.
For starters, there is no guarantee anything will change. Shareholders don’t have to follow the ISS recommendation. Musk and Murdoch might continue to serve. If the pair stop serving then Tesla might need to add a couple more independent directors to its board — which it can do relatively easily. And the recommendation might make Tesla adjust board compensation practices.
Tesla stock was down 0.7% in premarket trading Monday. S&P 500 futures were down 0.1%. Dow Jones Industrial Average futures were rising about 0.2%.
Tesla’s board currently has nine board members. That isn’t an unusual size. The Apple (AAPL) board has eight members. General Motors (GM) has 12 board members.
It’s going to be a busy month for Tesla and its shareholders. The company expanded the release of the latest version of its autonomous driving features dubbed full self driving, or FSD, on Friday. Before the annual meeting, third-quarter delivery figures should be announced. After the annual meeting come third-quarter earnings.
Wall Street is looking for about 221,000 vehicles to have been delivered in the third quarter and for Tesla to report earnings of about $1.40 to $1.50 a share.
All this is happening while shares are at the highest level in months. Tesla shares closed at $774.39 Friday and have risen about 15% over the past three months.
Write to Al Root at [email protected]
