Tesla's board takes more heat over Elon Musk succession planning

Karen Róbertsdóttir has submitted a resolution for Tesla investors to vote in May on whether the board should prepare and maintain a key-person risk report

 Tesla’s board of directors is facing mounting pressure to prove just how prepared they are for the potential loss of Elon Musk, the chief executive officer largely behind the breakneck rise and dramatic fall in the company’s valuation.
 
Karen Róbertsdóttir, a shareholder in Reykjavik, Iceland, has submitted a resolution for Tesla investors to vote in May on whether the board should prepare and maintain a key-person risk report. Several other shareholders who wanted to put forward proposals — at least one of which also pertained to Musk — are frustrated with how the company disclosed plans to hold its annual meeting months earlier than in recent years, sparing the directors from even more heat.

 
If Róbertsdóttir’s motion makes it onto Tesla’s proxy, it would give investors a tangible way to force Tesla to be more forthcoming about an area of concern that’s been growing since Musk’s takeover of Twitter. The carmaker’s directors designed an unprecedented pay package years ago that seeded the CEO with the means to agree to the $44 billion deal just as social media and technology firm shares were beginning to plunge.
 

Musk recently became the first person ever to lose $200 billion of net worth — and his sale of almost $40 billion of Tesla shares amid months of impulsive tweeting have aggrieved several Tesla investors. One accused the board of having been missing in action, while another mixed it up with Musk on the social media service he overpaid for. Tesla’s investor relations representatives and board chair Robyn Den­h­o­lm didn’t respond to requests for comment. The electric-car maker disbanded its communications team in 2019.

 
Róbertsdóttir shared a copy of the proposal she submitted in the name of Sumtris ehf, the Icelandic limited liability company she leads as CEO. She called for the carmaker with just three named executive officers and no COO to document processes and procedures for succession of key people and mitigate the financial impact their loss would have.
 
“As the new owner of one of the largest social media networks globally, Musk has no excuse for this move,” said Antoine Argouges, Tulipshare’s founder and CEO. “Instead, Tesla chose to do the bare minimum.”
 
Tesla often uses more means than just regulatory filings to make announcements about events, including annual meetings. This week, it issued an 8-K, press release and tweet about plans for a March 1 investor day.

 
Meredith Benton, the founder of an ESG-focused consulting firm who’s been involved in shareholder activism for 20 years, said she’s never seen a company announce an annual meeting date the way Tesla did.
 
“I don’t have a whole lot of sympathy for the activists’ complaints,” said Jill Fisch, a University of Pennsylvania professor who teaches corporate-law classes.