Tesla's Proxy Advisor ISS Do Not Want Chairwoman Denholm To Be Re-Elected: Report

Proxy advisor Institutional Shareholder Services (ISS) has advised Tesla Inc.’s TSLA shareholders not to re-elect the company's chair Robyn Denholm at the automaker’s shareholders meeting scheduled next month.

What Happened

ISS, which advises institutional investors and others, and often exercises voting on their behalf, expressed concerns over Denholm’s leadership due to the high and unreasonable compensation of directors, reported Reuters.

ISS also pointed out a rise in share pledged by Tesla directors and executives during Denholm’s tenure.

The proxy advisor said, “The significant number of pledged shares raises concerns regarding the audit committee’s ability to effectively oversee risk at the company.”

Why It Matters

According to Reuters, the aggregate number of pledged shares rose by 35.6% or nearly 4.9 million shares over 2019, and make up 10.43% outstanding shares with a value of $7.9 billion.

Denholm has served the Tesla board for nearly six years and has been the chairwoman since 2018. She is also on Tesla’s audit and compensation committee. 

In March, James Anderson, the head of global equities for Baillie Gifford, and major Tesla investor, hailed the appointment of Denholm.

Anderson also said that the former chairman Elon Musk "was getting things wrong."

Musk, currently Tesla's CEO, resigned his position on the board in 2018, in a settlement with the Securities and Exchange Commission. He is barred from chairmanship for three years.

Tesla Price Action

Tesla shares traded 0.32% higher at $994.06 in the after-hours session on Monday. The shares had closed the regular session 5.95% higher at $990.90.