Tesla’s rules violation board expressing “almost compelling to legal and accepted procedures.”
Admissions from Tesla board members admitting investors to wait until November before voting on a major issue has been exposed to a fire of sharp criticism from leading US experts in corporate governance.
This week, the company Finally, he lifted the secret Surroundings date That very late annual shareholders’ meeting. According to state law in Texas, Tesla was obligated to hold a meeting by July 13th. Previous meeting.
“They can’t even hold annual meetings each year? That’s ridiculous. It almost represents a light empty for legal and accepted procedures,” Charles Elson said. luck. “Shareholder voting is a core principle of our capital formation system, and if we abolish it, we will puncture the system itself.”
Elson is chair of the American Bar Association’s Business Law Section subcommittee and is founding director of the Weinberg Corporate Governance Center at the University of Delaware.
In 2024, he resigned from his consulting role with Holan & Knight, a law firm that counted Tesla as his client. Legal opinion Regarding the issue of CEO Elon Musk’s pay package, “The biggest in human history”.
The announcement of the November 6th annual meeting comes just hours after a group of institutional investors representing the $1.5 trillion assets under management expressed “deep concerns” over the delay and called on the board to “quickly” disclose the date.
Continuing silence of the board
“Tesla’s continued silence regarding the AGM is the cause of concern,” they wrote to the Tesla manager. Open Letter Released on Wednesday.
The company first approved it at the end of April. File failed There is no reason, and that definitive proxy statement within a normal time frame. Elson said there is little legally defensible legitimacy to push back the annual meeting, including the lack of audited financial statements.
He delayed it to vote for a new pay package for masks or his latest startup Xai (the two theories most commonly cited in the Tesla community).
“The law must be applied equally and neutrally. There are no special exceptions for special people,” Elson said of the mask.
Tesla did not respond to the request luck For comments.
However, unless shareholders take legal challenges at a later date, the company will not be affected.
“Why are these individuals paid hundreds of millions of dollars?”
Nevertheless, Elson fears that this attitude will drain the spirit of capitalism. It reduces the likelihood of investing in stocks if the company owner does not feel like he has a say.
“It’s a year in which all shareholders have the opportunity to express concern to management at open forums. It’s a natural part of the corporate calendar that guarantees accountability. There’s no way shareholders can deny basic suffrage,” he said.
As more companies follow Tesla’s example, disenfranchised investors can increasingly seek contractual protections in their debt-based financing systems. However, this limits economic growth. Because it reduces the appetite to the risks that distinguish the US Europe is slowing down.
Elson argued for a recent proposal by Wedbush analyst Dan Ives to establish a special board oversight committee tasked with exercising influence over CEOs. “shut upMusk responded to Ives and immediately shot down the proposal.
“I don’t think this board can act outside of the interests of masks. So the question is, what exactly does it do,” Elson asked. “Why are these individuals paid hundreds of millions of dollars?”