Five institutional investors, including the California State Teachers’ Retirement System (Calstrs), the Connecticut Retirement Plans and Trust Funds, and CtW Investment Group, have signed a letter to Tesla director Antonio Gracias urging the company to seek board members that are independent of Elon Musk.
In addition to expanding the size of the Tesla board to include two new members that do not have ties with Musk, the group which manages a combined $721 billion in assets – Caslstrs is the second largest pension fund in America – is also advocating for annual elections for all board members. Presently, only one third of the directors are elected each year. Calstrs is one of the founders of Investor Stewardship Group, which includes several other major investors such as BlackRock Inc., State Street Corp., Vanguard Group, and T. Rowe Price Group. In January, that group formulated a new policy position that supports annual elections for all board members as a way of increasing the accountability of directors to shareholders.
The influential group of investors argue that “Directors should be held to a higher standard of independence given the conflicts of interest that permeate this board.”, according to a report by Bloomberg. “A thoroughly independent board would provide a critical check on possible dysfunctional group dynamics, such as groupthink.”
Less than 11% of S&P 500 companies have staggered board elections today. In 2011, almost a third of them did according to governance data provider Equilar. Last year, 10 proposals seeking declassified boards received approval from 80% support from shareholders according to data compiled by Fundvotes.com.
“As companies grow up and mature, they need to have governance practices that reflect that,” Philip Larrieu, an associate portfolio manager for Calstrs, said in a phone interview via Bloomberg. “When the stock is doing well, the argument is ’we don’t need to make changes, we are doing well.’ But we will push for these changes regardless of the stock price.” The statement by Calstrs comes at a time when Tesla stock continues to reach all-time highs, surging to over 40% gains in this year alone. Tesla has become the largest U.S. automaker, beating General Motors in market capitalization.
Today, Tesla’s board is made up of Musk; his brother, Kimball; Gracias, who is the founder of a private equity firm and a director at SpaceX; Ira Ehrenpreis, a venture capitalist and SpaceX investor; Brad Buss, a former SolarCity chief financial officer; Steve Jurvetson, a venture investor and SpaceX director; and Robyn Denholm, the chief operating officer of Telstra Corp., Australia’s largest telecommunications company.
Musk is the largest Tesla shareholder and holds a stake worth approximately 21% of the company, according to data compiled by Bloomberg. Gracias is the sixth largest shareholder with a 3.75% stake.
A Tesla spokesperson has responded to the letter send to the company, citing “We are actively engaged in a search process for independent board members, which is something we committed to do several months ago, and expect to announce new additions fairly soon”. The Silicon Valley-based electric car maker and energy company added, “We regularly engage with our shareholders and value their feedback.”
“Getting independent people on the board is important in terms of holding management accountable,” Etelvina Martinez, the corporate governance manager at CtW Investment Group, which also signed the letter, said in a phone interview. “Shareholders need to be able to hold management accountable. While the stock price is doing extremely well, there are still concerns about corporate governance.”
Some of the concerns raised in the letter go back to last year’s acquisition of SolarCity by Tesla. Despite Musk’s assurances that the merger was good for both companies, there was concern over the financial health of such an acquisition. “If Tesla truly wants to be forward thinking, then it needs to embrace accountability and it needs to welcome diverse, independent opinions into its boardroom,” New York City Comptroller Scott Stringer told Bloomberg. “Strong performance doesn’t insulate Tesla from accountability.”
Top Rated Comments (view all)
Discuss: News
Log in with:
Or sign up with TESLARATI:
I agree with @J.Taylor the board has done great so far and am not concerned with how lucrative this may have been for them. I also find it appropriate for a targeted search of a few incremental 'independent' members as long as they have the best interest of the company at heart.
In the meantime, continue to be delighted by some of the recent pics showing up... e.g.
At this time it still is not advisable to change the board or to put elections in place. The vision will disappear; the money is flowing away like water and The World has a larger problem.
I call upon Green Investors to protest and buy Tesla shares and throw those Five Institutional Investers out of the company.
If there need to be chosen independent members, I will run for candidate who will plee for a Green Policy, which goes beyond the present policy. So like this post................................ and when enough, more then 100.000 or 1.000.000 likes I will contact Elon.
Because it is the function of an investor, its policy and its reason to exist. Everywhere in the World it is the same with retirement investors. They need to make money to be able to pay out the members. And having a company like Tesla in the portfolio is good for the reputation and for getting more members, but in reality they only invest to get more money out.
In The Netherlands the largest retirement company, The ABP for Government people, is an institutional investor as well and does the same. It doesn't care about in which it invests as long it gets the money. It even invests in wars, in diamondlabour or dirty oil bussiness where death fall, while most of its members don't want those investments. They, the ruthless stockbrokers who work there, just suck money.
So you have no direct evidence then. The article writes that those five institutional investors are looking for "independent" board members and so is Tesla. This is what is known at this point. Maybe you are correct but you have no evidence at this point.
I certainly can look for evidence.. ...
I would appreciate that over speculation. We have enough speculation going on inside our White House with the idiots there currently to last my entire life.
Investment firms and retirement funds are often tied far too closely to big oil, and we know that the Fossil fuel industry has lots of reasons to try any sort of dirty trick to trash electric cars and green power.
Hopefully Elon is a step ahead of games like this just like he has been every other time they tried for a free ride.
At the end of the day, what matters is the end result, in other words is there profitable growth of the company long term which should ultimately translate into dividends for shareholders... and share value rise more in the short term (again, personally, on the latter I'd also view that as a long term gain... as I am not a speculator by nature...).
I agree with @J.Taylor the board has done great so far and am not concerned with how lucrative this may have been for them. I also find it appropriate for a targeted search of a few incremental 'independent' members as long as they have the best interest of the company at heart.
In the meantime, continue to be delighted by some of the recent pics showing up... e.g.
The search for independent board members started some time ago:
[MEDIA=twitter]852243718094561280[/MEDIA]
Maybe what you write is true but how do you KNOW it is.
Because it is the function of an investor, its policy and its reason to exist. Everywhere in the World it is the same with retirement investors. They need to make money to be able to pay out the members. And having a company like Tesla in the portfolio is good for the reputation and for getting more members, but in reality they only invest to get more money out.
In The Netherlands the largest retirement company, The ABP for Government people, is an institutional investor as well and does the same. It doesn't care about in which it invests as long it gets the money. I wouldn't be surprised if ABP is one of those institutional investors of Tesla as well. But that is only a guess.
It even invests in wars, in diamondlabour or dirty oil bussiness where deaths fall, while most of its members don't want those investments. They, the ruthless stockbrokers who work there, just suck money. They say:"As long as people are bliss / ignorant, we just do what we want. And when some bad news pops up, we say we are working on it. After a while people forget the whole thing and bussiness is back to normal". That's what happens........they only look at the Purse and like J Geils (R.I.P) say Serves You Right To Suffer, babe
So you have no direct evidence then. The article writes that those five institutional investors are looking for "independent" board members and so is Tesla. This is what is known at this point. Maybe you are correct but you have no evidence at this point.
I certainly can look for evidence.. ...
I would appreciate that over speculation. We have enough speculation going on inside our White House with the idiots there currently to last my entire life.
I will do, but it'll take some time.
Two things I can all ready say.
1)The things said about the Dutch ABP came from news facts of TV, Radio, papers and magazines; even the magazine of ABP itself.
2) Pensionfunds are term institutional investors. They invest in short-, middle- and longterm. But what is longterm for them? They have to take in account periods of low income, so long term with them sometimes could mean a period of 10 years.
Tesla is still a company which developes "green products" and initiates all kinds of bussiness. That will last more then 10 years at least, more likely 20 to 50 years. So for the near future all the profits need to go to "green investment" in stead of return the money to the investors.
Institutional investors get nervous about the Green policy, Thinktanks and groupthinks. Thinktanks and groupthinks have a different function then making money. Investors at the other hand see it differently and find those groups not usefull to the goal of making money. That last point, making money, is what you can read throughout the article. It is all about stocks, shareholders, increasing the accountability of directors to shareholders, when the stock is doing well, the argument is ’we don’t need to make changes, we are doing well.’ But we will push for these changes regardless of the stock price, Getting independent people on the board is important in terms of holding management accountable and while the stock price is doing extremely well, there are still concerns about corporate governance.” Those arguments relate to the goal of money only.
But Tesla is a company which has different ideas then making money. Changing the World is the main goal. That costs money in the near future. Returns will only be in time. 30 to 50 maybe 80 years from now???? Who knows. But in the end it is in the interest of the institutional investors and their clientelle as well.
I buy a Tesla model 3, maybe Tesla's solar panels and powerwall because of the investments in the future. I do not buy those things for the boardmembers of those institutional investors and their shareholders, like governments who use the money to build coal-fired power stations.
I will do, but it'll take some time.
Two things I can all ready say.
1)The things said about the Dutch ABP came from news facts of TV, Radio, papers and magazines; even the magazine of ABP itself.
2) Pensionfunds are term institutional investors. They invest in short-, middle- and longterm. But what is longterm for them? They have to take in account periods of low income, so long term with them sometimes could mean a period of 10 years.
Tesla is still a company which developes "green products" and initiates all kinds of bussiness. That will last more then 10 years at least, more likely 20 to 50 years. So for the near future all the profits need to go to "green investment" in stead of return the money to the investors.
Institutional investors get nervous about the Green policy, Thinktanks and groupthinks. Thinktanks and groupthinks have a different function then making money. Investors at the other hand see it differently and find those groups not usefull to the goal of making money. That last point, making money, is what you can read throughout the article. It is all about stocks, shareholders, increasing the accountability of directors to shareholders, when the stock is doing well, the argument is ’we don’t need to make changes, we are doing well.’ But we will push for these changes regardless of the stock price, Getting independent people on the board is important in terms of holding management accountable and while the stock price is doing extremely well, there are still concerns about corporate governance.” Those arguments relate to the goal of money only.
But Tesla is a company which has different ideas then making money. Changing the World is the main goal. That costs money in the near future. Returns will only be in time. 30 to 50 maybe 80 years from now???? Who knows. But in the end it is in the interest of the institutional investors and their clientelle as well.
I buy a Tesla model 3, maybe Tesla's solar panels and powerwall because of the investments in the future. I do not buy those things for the boardmembers of those institutional investors and their shareholders, like governments who use the money to build coal-fired power stations.
When you have verifiable information about this specific story please share.
It is speculative, but I think the search started a few months ago under oral pressure of the Five Institutional Investors (FII) when there were some (informal/formal?) meetings between the FII and Tesla. So for Tesla not voluntarily.
Mostly such a process / topic runs like that. First complaints, coffeecorner informal meetings, complainers internal more official meetings, complainers seek external other parties, external meetings with all complainers / parties, drawning up a paper / discussion-point, A small but important group brings the paper into the agenda with the company in which the complaint is about, discussing it with the company. When not satisfied enough put more pressure by going to the full shareholders meeting, still not satisfied go to the (internal or external) press.
I agree with Elon on both points (if I understood correctly).
1) The FII should seek other investments then Tesla and build of slowly their interests in Tesla and sell the stocks to Green Policy investors.
2) More and independent members, (who want to invest on the policy of Protecting The Envirronment in stead of policies based on gaining lots of money). No members or employees of the FII or related organisations / institutions allowed in the board.
Good for you, Elon!
At the end of the day, what matters is the end result, in other words is there profitable growth of the company long term which should ultimately translate into dividends for shareholders... and share value rise more in the short term (again, personally, on the latter I'd also view that as a long term gain... as I am not a speculator by nature...).
I agree with @J.Taylor the board has done great so far and am not concerned with how lucrative this may have been for them. I also find it appropriate for a targeted search of a few incremental 'independent' members as long as they have the best interest of the company at heart.
In the meantime, continue to be delighted by some of the recent pics showing up... e.g.
From this angle The 3 looks beautiful; a car I am willing to buy!
@Michael,
By mid 2018 Cathar-country?
"The search for independent board members started some time ago:"
It is speculative, but I think the search started a few months ago under oral pressure of the Five Institutional Investors (FII) when there were some (informal/formal?) meetings between the FII and Tesla. So for Tesla not voluntarily.
Mostly such a process / topic runs like that. First complaints, coffeecorner informal meetings, complainers internal more official meetings, complainers seek external other parties, external meetings with all complainers / parties, drawning up a paper / discussion-point, A small but important group brings the paper into the agenda with the company in which the complaint is about, discussing it with the company. When not satisfied enough put more pressure by going to the full shareholders meeting, still not satisfied go to the (internal or external) press.
I agree with Elon on both points (if I understood correctly).
1) The FII should seek other investments then Tesla and build of slowly their interests in Tesla and sell the stocks to Green Policy investors.
2) More and independent members, (who want to invest on the policy of Protecting The Envirronment in stead of policies based on gaining lots of money). No members or employees of the FII or related organisations / institutions allowed in the board.
Good for you, Elon!
Then you are making up a story to fit your preconceived conclusion. Is this fair to Elon?
Then you are making up a story to fit your preconceived conclusion. Is this fair to Elon?
As a former board member of an organisation I can say: this is how it goes, most times. Yes it still is fair to Elon, cause of the two different views which are in conflict here. It has nothing to do with the person.
Maybe it is not fair towards the body of FII.
So, Mark, I did not see this happening I experienced it through the meetingbodies, by exact management science.
