Who would imagine a ‘Tesla’ without Elon Musk?
Elon is the chief executive officer and chairman at Tesla since 2004. One of the stockholders of the company, Jing Zhao has proposed to remove Elon Musk from the board’s chairmanship and employ an independent director right prior to annual shareholder meeting of Tesla.
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]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[/perfectpullquote]Zhao wrote in his proposal.
Zhao has 12 shares of the company’s common stock and he emphasized his concerns on conflictions possible to occur in the future due to Elon’s other existing positions at SolarCity and SpaceX.
As the other members of the board, just like anyone else on this planet, are totally aware that the ‘Tesla’ dream and its success so far, would have never come true without Elon Musk, they simply expressed opposition and rejected the proposal. The board made a common statement that The company was still best served by Mr. Musk and for further opportunities to be achieved, he is the one needed.
And here is the board’s official statement as a response:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] The Board believes that the Company’s success to date would not have been possible if the Board was led by another director lacking Elon Musk’s day-to-day exposure to the Company’s business. 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. 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. The Board believes that the broad authority of the Lead Independent Director and the presence of six other independent directors ensures that the Board acts independently. This current Board structure also is consistent with majority practice at large public companies: according to the 2017 Spencer Stuart Board Index, 72% of companies in the S&P 500 do not have an independent board chairman. The proponent acknowledges that a combined Chief Executive Officer and Chairman is an effective form of leadership for an early-stage company, until it faces increased competition and rapid technological changes. The Board believes that it is precisely during times when a company must quickly adapt to constant change and outside pressures that Board leadership needs to be lockstep with the Company’s operations. Our achievements to date notwithstanding, the Company is still at a point in its development where we must execute well in order to realize our long-term goals, and separating the roles of Chief Executive Officer and Chairman at this time would not serve the best interests of the Company or its stockholders. [/perfectpullquote]
What’s gonna happen?
It’s more than likely, nothing. As Elon Musk has the most of the shares of the company and more importantly, as the Tesla investors and fans all around the world believe that Tesla’s behind the scenes success is mostly thanks to Elon, he will clearly keep his chairman position of the board in the short and mid-term.