SAN FRANCISCO: Proxy advisory firm ISS has recommended Tesla investors to vote against the re-election of the board chair Robyn Denholm, citing concerns about the lack of scrutiny of the pledging of a few company stocks by CEO Elon Musk and his brother Kimbal Musk.
According to Reuters, ISS said in a report that pledging shares, and using them as collateral for loans, increases risks for Tesla company investors, given the value of shares sold by Elon Musk and his brother and the likelihood of further raises.
ISS said: “Pledging does inherently pose high risks to ordinary shareholders, and the likelihood of the forced sale of pledged shares increases when the share price (and therefore a value of the collateral) is already declining.”
Tesla shares are down about 60 per cent from their record high in November 2021. ISS said the shares pledged by Elon Musk accounted for 58 per cent of his Tesla ownership.
Musk didn’t respond to Reuters’ request for comment. He tweeted in January that advisory firms like Glass Lewis and ISS had “far too much power.”
Tesla has a limit on pledging company stock, setting the maximum loan at 3.5 billion dollars or 25 per cent of the total value of the pledged stock.
ISS has recommended votes for Elon Musk and co-founder JB Straubel as board members.
Proxy advisory firm Glass Lewis the previous month recommended Tesla company shareholders vote against Straubel, citing worries about his independence because he served as chief technology officer at Tesla company until 2019.
