Tesla to Trim Board

April 22, 2019 at 12:00 AM

Tesla Inc. plans to reduce its board of directors to nine members from 11 and reduce their terms to two years in June, according to its proxy statement.

The company also would allow a simple majority of shareholders to approve certain significant changes, replacing the current two-thirds majority rule.

The moves come as Tesla strives to significantly increase its production levels and CEO Elon Musk maneuvers to avoid sanctions from the U.S. Securities and Exchange Commission for his impulsive tweets about the company’s future performance.

The two directors who won’t seek re-election this year are Brad Buss, former chief financial officer of Solarcity Corp., and Linda Rice, CEO of Johnson Publishing Co.

Bloomberg notes that two more directors—Musk cronies Antonio Gracias, a private equity executive, and Stephen Jurvetson, a venture capitalist—say they won’t seek re-election to the board next year if shareholders approve two-year terms for directors. Both men sit on the board of Musk’s closely held SpaceX.

Analyst herald the board shakeup as an overdue step to strengthen Tesla governance. Some believe Tesla should add at least one director who has strong manufacturing expertise, Bloomberg says.

The news service points out that Tesla’s share price has plummeted 18% this year against a 21% gain for the NASDAQ Composite.