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10 May, 2018 15:16

Out with nepotism! Tesla investors want Elon Musk’s brother booted off board

Out with nepotism! Tesla investors want Elon Musk’s brother booted off board

A group of activist investors has called for a radical shake-up of Tesla's board of directors, aiming to remove Kimball Musk, the brother of company’s CEO Elon Musk, as a board member.

CtW Investment Group, which represents some $250 billion worth of union pension investments, reportedly wants the company’s shareholders not to support the reappointment of three Tesla board members at the annual meeting, scheduled for the next month. Apart from Musk’s brother, the group urges to boot James Murdoch and Antonio Gracias from the board.

“Instead of recognizing the need for independent and effective board leadership, Tesla has re-nominated three directors who exemplify the company’s failure to evolve,” Dieter Waizenegger, the group's executive director, wrote in his proposal on Wednesday. “We admire Tesla as successful innovator with an environmental mission; however, its continuing success looks more tenuous than ever.”

Kimball Musk was elected a board member in February of 2017. However, after more than a year, the group of investors says that only nepotism keeps him in the chair. According to CtW, he “has no professional experience in the auto industry, and has proven ineffective as a public company director at Chipotle.”

Chipotle Mexican Grill is a US chain of fast casual restaurants that specializes in tacos and Mission-style burritos. The company reportedly own outlets in the US, UK, Canada, Germany and France.

The group said that Kimball, who also runs a small restaurant chain named The Kitchen Cafe and owns an urban farming venture, lacks “any relevant industry experience or possessing a track record of effective public company board service.”

Murdoch and Gracias have served on Tesla's board since July 2017 and February 2017 respectively.

“While adding new directors was a step in the right direction, the choice of Mr. Murdoch as one of those directors does not appear well considered, given his troubled history as an executive and director, the disturbing parallels between nepotistic practices at Fox and Tesla, and his lack of relevant industry experience,” CtW claimed.

The company’s shares have plunged six percent since the beginning of the year. Earlier this month, Tesla reported a record loss of almost $710 million in the first quarter of 2018, more than double its losses during the same period a year ago.

“While Tesla has never reported a profit, going into 2017 shareholders could reasonably believe that the company was on the path to profitability,” CtW wrote. “But since the beginning of 2017, Tesla’s financial position has deteriorated along every dimension.”

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