One of the largest financial firms on Wall Street attempted to oust Tesla CEO Elon Musk earlier in 2018 from the electric vehicle company and replace him with an independent chairman, Reuters reported Thursday.
BlackRock voted for a measure in June requiring the company’s chairman position be an independent director, according to BlackRock’s filing with the Securities and Exchange Commission. The proposal was ultimately defeated but would have effectively neutralized Musk’s position in the Silicon Valley company had it been approved.
The measure was overwhelmingly defeated, with more than 86 million shares voting against, while fewer than 17 million voted in favor, Tesla told Reuters. BlackRock’s proposal transpired less than three months before Musk tweeted a short-lived plan to take the 15-year-old automaker private.
His Aug. 7 tweet announcing the decision followed a report suggesting Saudi Arabia became a major Tesla shareholder earlier this year. Musk dinged the idea after investors nearly revolted. Management experts were left shaking their heads at the chaotic process. (RELATED: Here’s How Musk’s Obsession With Tesla’s Critics Nearly Torpedoed His Company)
“Tesla investors must realize that they have a panicky, erratic, possibly self-destructive CEO at the helm,” Jeffrey Sonnenfeld, a professor at the Yale School of Management, told The New York Times. “No CEO is ever this confused and confusing.”
He added: “A major enterprise should not navigate its ownership path and market valuation through the frantic, public, volatile impulses of the CEO … Let alone through the selective disclosures of elite shareholder referenda.” BlackRock’s maneuver is not the first time financial firms tried to split up the company.
Investment groups also criticized Tesla’s board in 2016 for its deep connections to Musk. CtW Investor Group, for instance, said the market’s “hostile reaction” to a SolarCity deal was induced, in part, by the group’s recognition that Donald Kendall, chief executive of investment management firm Kenmont, is the only person on the SolarCity board without ties to Musk.
BlackRock, for its part, has a storied history of attempting similar ploys. Reports in 2017 show funds affiliated with BlackRock were involved in a shareholder rebellion against ExxonMobil over the company’s refusal to accept measures on climate change.
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