Date
23 September 2018
Elon Musk serves both as Tesla’s chairman and chief executive officer. Photo: AFP
Elon Musk serves both as Tesla’s chairman and chief executive officer. Photo: AFP

BlackRock voted to replace Tesla’s Musk with independent chair

Funds run by BlackRock Inc. voted over Tesla Inc.’s objections in favor of a shareholder proposal in June that would have required the electric carmaker to replace Elon Musk with an independent board chairman if the motion had not been defeated, Reuters reports, citing a regulatory filing.

BlackRock-managed funds voted for a measure requiring the board chairman be an independent director, according to a BlackRock filing with the US Securities and Exchange Commission.

More than 86 million shares voted against the proposal at a shareholder meeting in June, while fewer than 17 million voted in favor, according to Tesla.

Musk serves both as Tesla’s chairman and chief executive officer. Some corporate-governance activists call for the role to be split between two people to improve oversight, and the new filing revealed at least one major investor backed such changes at Tesla. BlackRock’s role in backing the proposal was not previously reported.

Musk has been under public pressure over the company’s spending and after tweeting on Aug. 7 that he planned to take the company private, only to abandon the idea by Aug. 24.

Tesla’s board had said that the company’s success “would not have been possible” without Musk’s “day-to-day exposure to the company’s business”.

Yet top proxy adviser Institutional Shareholder Services supported the proposal, citing concerns about Musk’s pay and board independence.

“BlackRock’s approach to investment stewardship is driven by our fiduciary duties to our clients, the asset owners,” a BlackRock spokeswoman said in an emailed statement.

“Our approach to engaging with companies and proxy voting activities is consistent with our commitment to drive long-term shareholder value for our clients.”

BlackRock funds are a top-10 Tesla stockholder, controlling nearly 6.5 million of Tesla’s 170 million shares, according to Thomson Reuters data based on public filings.

Funds run by Vanguard Group Inc. voted against the independent-chair proposal, a recent filing showed. Funds run by Fidelity Investments sided with Tesla on director votes and other controversial items this spring, earlier filings showed.

BlackRock’s filings also showed it voted this year in favor of shareholder proposals at Facebook Inc. and Google parent Alphabet Inc. to give each shareholder an equal vote on governance matters.

Some companies are structured in a way that effectively gives some shareholders more power than others, regardless of the number of shares they hold.

BlackRock withheld votes or voted against nearly all management recommendations at Netflix Inc., including an advisory vote on executive pay.

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CG

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