To many Tesla fans’ disappointment (or relief), Elon Musk has abandoned his grand plan to take Telsa private, saying it’s for the best given the complicated process of actually making it happen. And now he’s left dealing with the many headaches that come with being the head of a public company.
On Thursday, BlackRock revealed in a SEC filing that a group of BlackRock-managed funds with significant ownership in Tesla had voted in favor of a shareholder proposal recently to remove Musk as the chairman of Tesla’s board of directors and appoint an independent hire. The proposal wouldn’t have affected Musk’s role as Tesla CEO.
The funds in question are among the top 10 shareholders of Tesla, owning 6.5 million shares, or 3.8 percent, of the company, according Thomson Reuters’ calculations based on public filings.
Although the proposal was defeated at a shareholder meeting in June (Tesla said 50 percent of shareholders voted against it, while 10 percent voted in favor), BlackRock’ support revealed in Thursday’s filing shows the mounting pressure Musk faces from Tesla’s key shareholders in recent months.
Musk is one of the few public company CEOs in the tech space who also act as the company chairman. Another example is Facebook’s Mark Zuckerberg, who has also faced multiple ousting proposals from shareholders in recent years.
Last month, a Boston-based fund owning about $10 million of Facebook shares filed a proposal to replace Zuckerberg with an outside hire as the company chairman after Facebook shares plunged by 20 percent in one day, the largest single-day drop in U.S. stock market history, due to disappointing second-quarter results.
In a typical public company structure, a CEO works in conjunction with the company board when making important decisions. Having the same person hold both CEO and board chairman positions naturally increases the risk of making unwise decisions—and, therefore, increases the risk of hurting shareholder interests.
Trillium Asset Management, the Facebook investors behind the July proposal, argued that most of Facebook’s peer tech giants—Google, Twitter, Microsoft and Apple, for instances—have split the two roles and that, more broadly, 59 percent of the S&P 1500 companies have separate CEOs and chairpersons.
“BlackRock’s approach to investment stewardship is driven by our fiduciary duties to our clients, the asset owners,” BlackRock 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.”