Joining the chorus of analysts who have been calling for Tesla Inc.’s TSLA board to act is Sen. Elizabeth Warren (D-Mass).
What Happened: One of the fiduciary duties of the board is to ensure that a controlling shareholder, especially a CEO, does not treat the company as a private plaything, Warren said in a letter addressed to Robyn Denholm, the chairman of Tesla’s board.
The Senator was apparently referring to the issue at hand at Tesla, which has seen its stock down about 57% for the year-to-date period amid a host of factors, the chief among them being CEO Elon Musk’s preoccupation with his newly-acquired Twitter social media platform.
See Also: How Did Elon Musk Make His Money
“I have a series of questions about how the Tesla Board is dealing with conflicts of interest, misappropriation of corporate assets, and other actions by Mr. Musk that appear not to be in the best interests of Tesla and its shareholders, she said.
The board’s responsibility, according to the Senator, includes ensuring Musk is an “effective CEO” and fulfills his legal obligations to act in the best interest of Tesla and its shareholders. She noted that some Tesla employees were pulled out to work for Twitter, which is appropriating resources from a publicly traded firm, to benefit Musk’s private company.
Conflicts Of Interests: The Twitter acquisition causes conflicts of interest, the Senator said. Given Twitter relies on ad revenue from Tesla’s rival auto companies, by allowing these companies to advertise on the platform, he could be causing potential injury to Tesla. Alternatively, by subtly shifting Twitter algorithms, he could ensure Tesla products receive greater attention and criticisms leveled against these products are suppressed, she added.
Debt-saddled Twitter under Musk could charge excessive amounts from Tesla for advertising or seek payment upfront, which also causes conflicts of interest, Warren said.
The Senator noted that under Musk, Twitter has allowed hate speech, racist language, climate misinformation, virulent sexism and anti-Semitic content. The actions of Twitter can have an impact on the Tesla brand and its ability to market its vehicles, she added.
Some questions posed by Warren included:
- Specific guardrails and oversight put in place by the board to ensure Musk is fulfilling his fiduciary management responsibilities at Tesla.
- Protection put in place to protect Tesla from conflicts of interest created by the Twitter buy.
- Presence of any formal or informal agreements between Tesla and Twitter or Musk and Twitter.
- Board’s evaluation of Tesla brand damage caused by Twitter’s actions.
- Assurances board received from Musk that he will not tweak Twitter’s algos to advance Tesla.
- Whether board members have concerns about Musk’s stock sale.
- Whether Musk’s employment contract has provisions that preclude him from selling additional Tesla stock in quantities that can hurt stock price and injure shareholders.
Warren sought responses to her questions no later than Jan. 3, 2023.
Musk, meanwhile, hit back at Warren over her accusations and suggested that she in her capacity as Senator has harmed the U.S.
The United States has definitely been harmed by having her as a senator lol
— Elon Musk (@elonmusk) December 20, 2022
Price Action: Tesla stock closed Monday’s session down 0.24%, at $149.87, according to Benzinga Pro data.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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