A storm is brewing at Tesla, and Elon Musk is at the center of the company's troubles. The CEO and chairman of the electric-car manufacturer faces two crucial votes at Tesla's annual shareholder's meeting on Tuesday: One could curb his power while the other could increase the independence of the board. Tesla and Musk have been under fire recently after several automobile crashes, difficulty meeting production goals, and growing concerns from Wall Street that it will have to raise funds. Musk has said it will not.
Here's what you need to know about these two critical shareholder votes.
1. Breaking up the top job
One investor proposal is encouraging Tesla to split the roles of chairman and CEO, saying "it is more and more difficult [for a single person] to oversee Tesla's business and senior management," according to The Washington Post. However, it's rare for companies to make that change when investors push for it, the Post reports. While many companies have a separate CEO and chairman, the average vote in support of dividing those duties in 2018 was 31 percent, according to the shareholder voting data firm Proxy Insight. What's more, such a vote hasn't received majority approval since 2015.
2. Voting out directors
CtW Investment Group, an activist group that works with pension funds sponsored by unions, wrote a letter to Tesla investors urging them to vote against three directors--including Musk's brother, Kimbal--who are up for reelection at this year's meeting. The group argued that Kimbal Musk, venture capital investor Antonio Gracias, and 21st Century Fox CEO James Murdoch are either lacking the experience necessary for the job or not independent enough. It's unclear whether shareholders will vote against the three directors.
Even if the company prevails, the campaigns could amplify the need for change at the company or apply pressure on Musk. "Now that Tesla's IPO is eight years in the past, a modernization of the Tesla board is long overdue," CtW wrote in its letter.