Tesla has announced the addition of two independent directors to its board, Ebony Media CEO Linda Johnson Rice and 21st Century Fox CEO James Murdoch. The purpose is to expand its current board of directors and add members to the board in which independent parties are not affiliated in any way to CEO Elon Musk.
Tesla was recently criticized for its lack of independence in their board of directors selection. According to CNBC, in 2016, a group of investors “sent a letter to the company that said too many of Tesla’s board members have personal or professional ties to CEO Elon Musk.” A couple months after, Musk stated the following on Twitter regarding the investors who questioned the board at the time:
“Investors in question should buy Ford stock. Their governance is amazing. Besides, I already said we’d add more independent members during SCTY merger. Will announce soon, but this group has nothing to do with it.”
Shareholders pushed for change due to the lack of diversity and independence, and the Connecticut Retirement Plans and Trust Funds specifically proposed at Tesla’s most recent annual meeting in April to “require Tesla board members to stand for re-election annually, rather than staggering member terms.” Tesla rebutted by stating its classified board structure is crucial to its long-term success and it was rejected by the shareholders.
Tesla has been in headlines recently for other matters, but the addition of Linda Johnson Rice and James Murdoch will ease the tensions somewhat between the company’s prior critics and its CEO.
Mohammad Sultani for TechFunnel.com