Tesla Announces Nomination of Ex-CTO JB Straubel to Join its Board of Directors

Tesla Announces Nomination of Ex-CTO JB Straubel to Join its Board of Directors | The Entrepreneur Review

Tesla, the electric vehicle and clean energy company, has announced its nomination of JB Straubel, the founder and CEO of e-waste recycler Redwood Materials, to its board of directors, according to a Securities and Exchange Commission filing on Thursday. Straubel, a co-founder of Tesla, founded his recycling venture in 2017 while he was still serving as the company’s Chief Technical Officer, but left in 2019 to focus on it full-time. If shareholders approve his nomination, Straubel will replace Hiromichi Mizuno, who is not seeking re-election at Tesla’s annual shareholder meeting on May 16.

Key-Person Risk

In addition to Straubel, Tesla is nominating CEO Elon Musk and Chair Robyn Denholm for re-election to the board of directors. Tesla is also asking investors to again approve PwC as the company’s auditor and to vote on two different executive compensation-related matters, according to its annual report. Only one shareholder-submitted proxy proposal will be eligible for a vote in May, which asks Tesla to provide a “key-person risk” report to investors, identifying how the company would deal with the departure of key executives for any reason, from retirement to an untimely death or disability.

Criticism of Elon’s Twitter Buyout

Tesla’s CEO, Elon Musk, has been the subject of key-man risk concerns from shareholders, given his integral role in the company’s success. Musk has also been criticized by investors for selling billions of dollars worth of his Tesla holdings to lead a $44 billion buyout of Twitter, where he remains CEO and has authorized high-ranking Tesla employees to work with him. While a Tesla director testified in court that Musk has discussed a potential successor to head the electric vehicle business, some investors remain worried about the risk associated with Musk’s central role at the company.

Concerns not uncommon

The Tesla board is asking shareholders to vote against the key-person risk report, arguing that the requested disclosures, like identifying executives most critical to Tesla’s long-term success and who may replace them, would invite competitors to “target and recruit high-value executives away from Tesla.” Concerns about key-man risk are not uncommon; according to a 2018 Morgan Stanley report, in 2017, 59 S&P 500 CEOs left their companies, and these companies then underperformed the market by 11% in the subsequent 12 months.

Also Read: Tesla Deliveries Reach a Record Number in the First Quarter of 2023

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