Tesla Inc. (TSLA), which became the top U.S. car maker by market capitalization this year, could be facing some hurdles from investors at its shareholders meeting tomorrow.
Two prominent shareholder proxy services, Institutional Shareholders Services Inc. and Glass Lewis & Co., agree with a proposal to declassify Tesla’s board structure. Currently, Tesla board members are elected for three-year staggered terms, while the proposal requests that they are elected yearly in an effort to increase accountability.
In April of this year, investors sent the electric vehicle giant a letter asking that the board add two additional directors who had no professional or personal ties to CEO Elon Musk, as five of his current six board members do.
Tesla has no intention of changing the lengths of its terms, as it mentioned in a filing. The company credits its staggered board with decisions such as creating an international network of Tesla stores, service centers and Supercharger stations as well as the acquisition of SolarCity.
“These and other similar decisions were made with a long-term focus and might not have happened if our directors were not afforded time to oversee and guide their implementation and execution. Ultimately, decisions like these are what differentiate Tesla from other companies and are a significant reason why the Company’s stock price has increased by more than 700% in the last five years,” Tesla said in the filing.
Tesla shares have recently broken intraday and closing records with stock reaching an all-time high close on Wednesday, hitting $341.01, and trading as high as $344.88 intraday in the subsequent session.
The company is not the only one who will be facing some shareholder heat on Tuesday, with GM squaring off with Greenlight Capital over its desire to split the the automaker’s stock into two classes, which is said to generate “tens of billions of dollars in shareholder revenue,”. However, GM, along with ISS and Glass Lewis, say that the idea reduces the company’s flexibility and that GM is “already driving transformational change and creating value for shareholders.”
Tuesday should be interesting to say the least.
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