In April, Elon Musk launched a call for results in Tesla by putting worried investors at ease: he said that he would spend more time in the company, after months of distraction in Washington, DC
But it was then.
Since the call, Musk and Trump have exchanged net insults in a quarrel that withdrew again and again. During the holiday weekend, it led to the announcement of Musk that he would launch a new political party.
Although the news is welcome for certain musk fans, the markets were not so enthusiastic; Tesla’s shares fell by almost 7% when the markets opened on Monday, a decrease that personally cost $ 68 billion.
Now, Tesla’s story has reached “a tilting point”, explains Wedbush analyst Dan Ives, a longtime bull that implored the board of directors to take measures to end the “soap opera” in a new note on Tuesday morning. “Tesla goes to one of the most important steps in its growth cycle with the autonomous and robotic future now at the door and cannot spend more and more time creating a political party, which will require countless times, energy and political capital,” he wrote. (In a note on Monday, Ives also said that the creation of a new political party was “exactly the opposite” of what the shareholders wanted it to do.)
Ives said that he feared that having a beef with Trump is to cost the company about 1 billion of opportunities in autonomous vehicles alone. “We believe that the board of directors must now take the bull by the horns,” he wrote.
In particular, his suggestions did not include the ban on musks in political adventures, even if the CEO is already busy directing Tesla and Spacex, while remaining actively involved in his other societies, including X and XAI. But Ives prescribed three stages that the board of directors could take to create “basic rules” around Musk’s ambitions.
Limit the time that Musk spends politics
“Some general railings on this front would help all those involved, including institutional investors, retail investors, Musk itself, the board of directors and Tesla employees in the world,” said Ives.
Set up a new Council Committee dedicated to Musk’s political party
All public boards of directors have special committees dedicated to specific functions, such as the remuneration of managers or the monitoring of cybersecurity risks. Ives thinks that Tesla should create a special supervisory committee of the board of directors focused only on Musk and its political ambitions. “The Board of Directors cannot control Musk donations … but they can have surveillance if its political ambitions / efforts interfere with its role as CEO of Tesla,” wrote Ives.
Give it greater participation in Tesla and more voting power
Rather than reducing Musk’s influence in the company, Ives suggests designing a new remuneration package focused on incentives that would give the CEO a larger part of the company and up to around 25% of voting power. “This would also create a framework that Potential Musk could encourage Tesla to merge with XAI,” he wrote, referring to the artificial intelligence data company, “and create one of the most powerful IA societies in the world under one roof in the next 12 to 18 months.” Under the plan of Ives, the hypothetical special committee mentioned above would also supervise the compensation package and if Musk violated its limits.
Tesla did not respond to FortuneComment request.
To say that the automotive administrators did not impress governance experts would be an understatement. Experts have long accused Tesla’s board of directors of being too comfortable with Musk. The directors include Musk’s brother, Kimbal Musk, a restaurateur, and several Musk friends, such as the co-founder of Airbnb, Joe Gebbia.
Charles Elson, founding director of the Weinberg Center for Corporate Governance of the University of Delaware, for example, was recently wondered if there was a tilting point for this advice. “Over the years, Musk’s behavior has become more scandalous,” said Elson. “The lack of response from the advice makes you ask you:” Who are these people? ” Why are they there? »»
“There was so much” now that the board of directors must do something moments “, and they failed each time,” said Nell Minow, expert in corporate governance and vice-president of value advisers. “I don’t think there is one thing like” now they have to do something “.”
