In April, a Tesla shareholder submitted a controversial bid to remove Elon Musk from the role of board chairman but a vote at the annual shareholder meeting held in Mountain View, California, revealed that a majority of board members wanted Musk to keep his role.
Proposal to Replace Tesla’s Chairman
In April, Jing Zhao wrote a proposal suggesting the removal of entrepreneur Elon Musk from the chairman position on Tesla’s board of director. Zhao explained that Musk’s position as the CEO of Tesla as well as chairman of the board could create conflicts in the company and make it impossible for him to oversee all aspects of Tesla’s operations as well as its senior management. Musk has held the positions of chairman of the board and Chief Executive Officer at the electric car company since 2004.
The letter also highlighted Musk’s other business ventures such as SpaceX and SolarCity and stressed that his involvement in other companies could cause potential conflicts between companies in the future. Other board members have argued that the likelihood of such an event is next to none. Zhao currently holds 12 shares in Tesla’s common stock.
Opponents of the proposal said that if it hadn’t been for Elon Musk, Tesla would not have reached the heights of success that it has today, which is why taking him out of a business that he himself has built, is out of question.
Shareholders Vote at Annual Meeting
2018 has been a tough year for Tesla and its embattled founder and CEO Elon Musk. But only halfway into the year, Musk has received a huge boost of confidence from shareholders who voted to keep him as the chairman of the board last week.
An emotional Musk gave a statement, moments after the meeting, saying that the past few months have been excruciatingly painful for the electric car company but he is grateful for the trust his shareholders have put in him despite the setbacks faced by the company in 2018. ‘I think we’re getting there,’ Musk said in a shaky voiced. It was evident that the chairman was deeply moved by the vote of confidence from his board members.
In the past few months, Tesla has been faced with some of its worst challenges to date from delays in production of the highly anticipated Model 3 Sedan to accusations of discrimination and lack of worker safety at company facilities. On top of that, the company has made headlines for its questionable self-driving technology after its autopilot system resulted in a fatal car crash in March, 2018.
Challenges Faced by Car Maker
As the company loses customers’ trust due to its production and safety crisis, Tesla’s stocks have plummeted by 7 per cent this year, leading to frustration within car maker’s senior management. There are currently hundreds of thousands of Model 3 buyers on the waiting list who made advance payments months ago, but have yet to receive their cars, leading analysts to speculate that Elon Musk isn’t up to the job of managing manufacturing responsibilities in the company.
During June’s shareholder meeting, Musk briefed board members on the company’s increasing production efficiency. Currently, Tesla is capable of manufacturing 3,500 Model 3 cars per week but after resolving bottlenecks in production, the number is expected to rise to 5,000 by the end of June.
Even though the company is currently struggling to meet its production deadlines, Musk says that manufacturing will eventually become Tesla’s greatest strength in the long run. The entrepreneur said that the company is aware of the problems causing a delay in production and is doing everything it can to address them.
The self-driving mechanism in the electric cars is the biggest cause of production holdups, according to Musk. Tesla CEO said that the biggest mistake the company was making was to automate everything, including tasks that are extremely simple for humans to perform but challenging for a machine to do.
The meeting addressed the concerns regarding three other directors on Tesla’s board as well including the CEO of 21st Century Fox, James Murdoch, a private investor, Antonio Gracias, and Elon Musk’s brother, Kimbal Musk. Critics had previously questioned these three members’ ability to provide any meaningful contribution to the company. However, the stockholders voted in favor of keeping their seats on the board.