Tesla Expands Full Self-Driving Beta Testing As Proxy Group Calls For Board Reshuffle
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A powerful proxy advisory firm recommends that Tesla Inc. shareholders vote against two current board members and for measures urging greater corporate responsibility.
Meanwhile, Tesla is increasing the number of drivers who can request the beta of its latest “Full Self-Driving” feature, despite concerns from regulators.
A memo from Institutional Shareholder Services on Friday advised voting against re-election of directors James Murdoch, who has stepped down from News Corp’s board of directors. in 2020, and Kimbal Musk, brother of Tesla CEO Elon Musk. ISS cited directors receiving “large capital grants” without providing a rationale, raising concerns about directors’ ability to effectively oversee business risk. ISS also complained that the board was not responsive enough to the measures approved by shareholders last year.
ISS also recommends “yes†votes on shareholder proposals to declassify the board of directors, publish a diversity and inclusiveness report, report on employee arbitration, and appoint an independent committee to overseeing “human capital managementâ€. Tesla’s board opposes the measures.
Tesla’s annual meeting of shareholders is set for October 7 at its factory in Fremont, California. Another proposal, supported by both ISS and Tesla’s board of directors, would reduce directors’ terms to two years, down from three currently.
Proposals opposed by Tesla are unlikely to be adopted, even if they win a majority of votes. Elon Musk and other insiders control about 25% of the voting rights, and qualified majorities of shareholders are required for major changes. This means that without the support of Musk and other insiders, almost 90% of shareholder support would be needed to cancel them.
Tesla isn’t the only company where shareholders lack a lot of power. Some of the nation’s largest and most influential companies, such as Walmart Inc. WMT,
and Facebook Inc. FB,
have near-total control in the hands of their founders, families and other initiates.
Technologically, Tesla this weekend launched a button on the dashboard screens of its vehicles where owners can request a software upgrade to the full beta of self-driving. According to the Tesla website, the company will grant FSB beta access to users who have a proven track record of safe driving, determined by a five-factor score compiled by Tesla.
Despite the name, the Full Self-Driving feature does not make cars fully autonomous, and last week the head of the National Transportation Safety Board called the upgrade premature and said Tesla’s use of the term was “deceptive and irresponsible”.
Last week, San Francisco transport authorities have also expressed concern on the safety of the FSB function before updating the software.
Federal regulators have investigated at least 25 accidents over the past five years involving Tesla’s autopilot driver assistance function.
Tesla shares TSLA,
are up around 10% year-to-date, compared to the S&P 500’s SPX,
almost 19% gain.
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