BlackRock voted to replace Tesla CEO with independent chairman

Mr Elon Musk serves as Tesla's chairman and CEO, and some activists call for the role to be split between two people.
Mr Elon Musk serves as Tesla's chairman and CEO, and some activists call for the role to be split between two people.

Funds run by BlackRock voted over Tesla's objections in favour of a shareholder proposal in June that would have required the electric carmaker to replace Mr Elon Musk with an independent board chairman if the motion had not been defeated, a regulatory filing showed on Thursday.

BlackRock-managed funds voted for a measure requiring the board chairman to 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 favour, according to Tesla.

Mr 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.

Mr 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 Mr Musk's "day-to-day exposure to the company's business".

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

"BlackRock's approach to investment stewardship is driven by our fiduciary duties to our clients, the asset owners," said a spokesman for BlackRock. "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.

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

BlackRock's filings also showed that it voted this year in favour of shareholder proposals at Facebook and Google parent Alphabet 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, including an advisory vote on executive pay.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 01, 2018, with the headline 'BlackRock voted to replace Tesla CEO with independent chairman'. Print Edition | Subscribe