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Tesla board chair Denholm on the hot seat as proxy firm advises against re-election

Credit: @TacosandTeslas/Twitter

Tesla Board of Directors Chairwoman Robyn Denholm is on the hot seat as proxy firm ISS advised shareholders to vote against her re-election.

ISS, or Institutional Shareholder Services, routinely makes investor recommendations prior to a variety of companies’ Annual Shareholder Meetings. Tesla is just one of these companies.

Leading up to the event, ISS makes various recommendations regarding potentially crucial company terms, including the way a Board of Directors may look moving forward.

Last year, for example, the firm advised Tesla investors to vote against the re-election of Ira Ehrenpreis and Kathleen Wilson-Thompson, stating “the board’s risk oversight in light of the pledging (as collateral) of a significant amount of the company’s stock by certain directors.”

This year is no different, but ISS is now looking for investors to vote against the Board’s chair, Robyn Denholm.

According to ISS’s report, it is advising investors to vote against her re-election due to a lack of criticism in regard to CEO Elon Musk and his brother Kimbal, who is also a member of the Tesla Board, and their pledging of shares.

ISS said that pledging the shares raises the risk for Tesla investors.

“Pledging does inherently pose risks to ordinary shareholders, and the likelihood of a forced sale of pledged shares increases at a time when the share price (and therefore the value of the collateral) is already declining,” the firm said (via Reuters).

Tesla shares are down over 49 percent in the past year. However, since the beginning of 2023, they have rebounded nearly 50 percent, up over $52 per share.

Musk has been critical of firms like ISS and Glass Lewis, which recommended Tesla shareholders vote against the inclusion of former executive J.B. Straubel on the board.

Glass Lewis asks Tesla shareholders to vote against JB Straubel’s board nomination

“Far too much power is concentrated in the hands of “shareholder services” companies like ISS and Glass Lewis because so much of the market is passive/index funds, which outsource shareholder voting decisions to them,” Musk said in a Tweet. “ISS and Glass Lewis effectively control the stock market.

Tesla’s Annual Shareholder Meeting is scheduled for May 16.

I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

Tesla board chair Denholm on the hot seat as proxy firm advises against re-election
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