In a recent development at Tesla Inc. TSLA, CEO Elon Musk is reported to have discussed purchasing a house from a Tesla director, raising concerns about the company’s governance.
What Happened: Joe Gebbia, a Tesla director, Musk had talked about buying a house from his startup, Samara, Reuters reported on Monday. This revelation has raised concerns about the independence of the board committee that Gebbia was part of, which made crucial decisions about Tesla’s future.
Gebbia, who is also the co-founder of Airbnb, was one of two independent directors on the committee. The eight-member committee was formed to decide on the company’s relocation from Delaware to Texas, a move initially proposed by Musk after a court rejected his $56 billion pay package.
However, Gebbia stepped down from the committee in March due to his personal relationship with Musk and a potential business transaction involving his startup, Samara, which was “currently on hold.” Although Tesla’s lawyers concluded that Gebbia’s ties to Musk did not pose a conflict of interest, Gebbia chose to step down from the committee.
“I believed I was and am independent, but decided to step down because I did not want my relationship with Elon to be used to unfairly attack the committee,” Gebbia said in a statement to Reuters.
Tesla is yet to respond to Benzinga’s queries.
See Also: China's $47B Challenge To The Foretold ‘Annihilation' Of Its Chip Industry
Why It Matters: Proxy solicitor Glass Lewis and a group representing the interests of workers with pension funds have questioned the special committee’s findings and called on other Tesla shareholders to reject both moves. Another proxy adviser, Institutional Shareholder Services, also recommended against reinstating Musk’s pay package but sided in favor of the move from Delaware to Texas.
Despite the criticism, a recent survey by Morgan Stanley showed that 57% of investors expect Musk’s pay package to be approved, outnumbering the 23% who expect non-approval. This shareholder vote, scheduled for June 13, is expected to determine Tesla’s long-term strategic direction and drive material volatility in Tesla shares.
Image via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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