Sen. Elizabeth Warren (D-Mass.) has reportedly urged the Securities and Exchange Commission to investigate Tesla Inc.‘s (NASDAQ:TSLA) board independence.
What Happened: Warren wrote to the SEC, expressing her concerns about the board’s independence from CEO Elon Musk, who she believes may be using his control for personal gain rather than the benefit of Tesla’s shareholders, The Wall Street Journal reported. This is not the first time Warren has raised these concerns, as she previously wrote to the SEC last summer.
In the letter sent this week, Warren expressed concerns about potential conflicts of interest between Tesla and Musk’s private companies including social media platform X. She also questioned Tesla’s recent decision to advertise on the platform.
“Despite the growing concerns posed by Mr. Musk’s conflicting roles at Tesla and his private companies, the Board appears to have taken no action to address these risks or protect its shareholders,” Warren wrote, as per the report.
Musk Reacts: Musk responded to the WSJ report on X alleging that Warren’s main economic and tax advisor is Stanford professor Joseph Bankman, father to collapsed crypto exchange FTX’s founder Sam Bankman-Fried who was convicted of fraud in November.
“I suspect some of this is coming from him,” Musk wrote.
Why It Matters: The NASDAQ stock exchange requires that a majority of board members be independent. The SEC can take action if it concludes that a company misled investors about the independence of the board.
Warren, however, is not the first to question the independence of the board at Tesla.
In January, Delaware Court of Chancery judge Kathaleen McCormick nullified a 2018 pay package worth about $56 billion awarded to Musk by the Tesla board in 2018 terming it an “unfathomable sum”. The judge found the board to be insufficiently independent of Musk and the governance process leading to the grant as well as the value to be “unfair” to other shareholders.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
Recent Comments