Tesla Inc is to bid farewell to longtime directors and reduce the size of its 11-member board to nine as the automaker ushers in a new era of corporate governance.
Director terms would be cut from three years to two, allowing shareholders to vote on the board’s performance with greater frequency, according to a proxy filed on Friday.
Tesla directors Brad Buss, former chief financial officer of Solarcity Corp, and Linda Johnson Rice, CEO of Johnson Publishing Co, would not seek re-election when their terms expire at the June 11 annual shareholders’ meeting.
If shareholders vote to reduce director terms to two years, venture capitalist Stephen Jurvetson — who returned from an extended leave of absence this month — has indicated he would not seek re-election next year.
Antonio Gracias, a private equity firm founder, has also indicated he would not stay on Tesla’s board after next year.
Buss, Gracias and Jurvetson have long been associated with Tesla CEO Elon Musk.
“It strikes me as an important step towards more effective corporate governance,” said Stephen Diamond, an associate professor of law at Santa Clara University. “I would call this a board shake-up. The trio of Buss, Gracias and Jurvetson are the heart of the Musk crowd and the old-boy network. Maybe this will bring some fresh air and light into the board.”
Jurvetson and Gracias should retire in June as opposed to waiting until next year, said Dieter Waizenegger, executive director of CtW Investment Group, which works with union pension funds that are Tesla investors.
“This is a first good step, but there’s more work to do,” Waizenegger said. “Tesla should look for people who have really strong manufacturing expertise.”
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