NEW YORK, May 17 (Reuters) – Portraying a CEO as a father figure is one way to tell there is a lack of prudent oversight. Supporting the company’s board of directors despite its obvious shortcomings is another. Tesla shareholders did both on Tuesday, with one playing the “son” of Elon Musk’s boss, a robot the electric car maker is developing, and several others once again brushing off concerns raised by proxy consulting firms Institutional Shareholder Services (ISS) and Glass Lewis. The neglect of corporate governance is a matter of concern.
After years of erratic behavior, Musk is raising new red flags. Admitting to CNBC after the shareholder meeting that he will say whatever he wants even “if the result is losing money,” should be a major concern. It’s a poor time for such statements when the market that Tesla (TSLA.O) has actually created threatens to be overtaken. The share price is down about 60% since November 2021 compared to a decline of 12% for the S&P 500 (.SPX). Already distracted by running the SpaceX rocket launcher and other ventures, the CEO spent more time elsewhere, tending to his $44 billion Twitter takeover.
That burden, in theory, should be eased with last week’s appointment of a chief executive. However, Musk has made it clear that he will continue to participate. His obsession with Twitter is already a growing liability. He tweeted Monday that investor George Soros, a frequent alt-right bogeyman who recently sold his stake in Tesla, “wants to erode the fabric of civilization.” It’s part of a permissive pattern of conspiracy theory that promises to scare off potential Tesla buyers and investors.
If there was any lingering doubt about Musk’s troubles with Twitter, a court ruling on Monday erased it. A settlement court confirmed the Securities and Exchange Commission requiring an attorney to examine any of the CEO’s material posts about Tesla after one he wrote in 2018 about taking the company private.
A more respectful approach to musk would have made sense during Tesla’s meteoric rise, when her mere existence broke with tradition. At this point, it amounts to negligence on the part of the shareholders. A California lawsuit joins others in allegations of discriminatory hiring practices. The Department of Justice has launched an investigation into the “self-driving” capabilities of Tesla, which has been involved in fatal crashes. Heeding the advice of the ISS and Glass Lewis could be at least a place to start, as letting judgment on autopilot can also have dire consequences.
He follows @tweet on Twitter
Tesla shareholders voted on May 16 to re-elect Elon Musk and Robyn Denholm to the company’s board of directors and add JB Straubel as director. The acting advisory firm Institutional Shareholder Services recommended that investors vote against Denholm, due to “concerns about the board’s risk-monitoring function,” while Glass-Lewis recommended voting against Straubel.
In an interview with CNBC following the electric car maker’s annual shareholder meeting, Musk answered questions on a range of topics, including his recent posts on Twitter — the social networking site he acquired in October 2022 for $44 billion — regarding a recent mass shooting and investor George Soros. Musk said he would continue to say “what I want to say, and if that means losing money, so be it.”
Editing by Jeffrey Goldfarb and Streisand Neto
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