By Dean Seal
A group of Tesla Inc. shareholders have come out against the nomination of a former executive to the car maker's board over concerns he is an insider coming in to replace an independent director.
Labor pension fund advisory firm SOC Investment Group and other investors urged Tesla shareholders on Monday to vote against the nomination of former Chief Technology Officer J. B. Straubel to a seat that will be vacated by independent director Hiro Mizuno.
The group has already engaged the board's chair, Robyn Denholm, about a potential overhaul of the board that would have "truly independent directors" swapped in for board members that have strong ties to Chief Executive Elon Musk, including his brother Kimbal Musk and other personal friends, according to the letter.
Installing Mr. Straubel to the board would mean that at least five of the board's eight members lack independence, the shareholder said.
"Replacing an independent director with another insider risks exacerbating existing problems that seem to arise from such a clubby board," the investors said.
A representative for Tesla didn't immediately respond to a request for comment.
The investor group argues that Tesla needs a more independent board to rein in Elon Musk and protect the company from its chief's recent actions, which they fear have tarnished the car maker's reputation.
They said that Elon Musk is already dividing his time too heavily between Tesla, his SpaceX startup and now Twitter, which he acquired and is now being overhauled at his direction.
The group also takes aim at Elon Musk's "often polarizing and inflammatory statements" on Twitter. The investors said the Tesla co-founder has been wading into "deeply divisive narratives" and promoting conspiracy theories that could alienate the company's customer base.
Adding Mr. Straubel, who served as the company's technology chief for 14 years until he resigned in 2019, would only further weaken the board's oversight of Tesla and Elon Musk, the investors said.
The shareholder group also questioned whether Airbnb Inc. co-founder Joseph Gebbia, who joined the board last year but has yet to be elected by shareholders, has too cozy of a relationship with Elon Musk. The group drew attention to a now-publicized 2018 text message in which Mr. Gebbia told Elon Musk that his tweet about taking Tesla private at $420 a share was a "baller move."
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
04-24-23 1058ET
