The Tesla shareholder meeting is about succession

Tesla investors face some big questions at this year’s annual meeting of shareholders — board seats for the president, CEO and former chief technology officer — as well as succession planning in the post-Elon Musk era.

The meeting, which will be broadcast live from the company’s Austin headquarters at 3 p.m. local time, follows Musk’s announcement that former NBCUniversal advertising chief Linda Yaccarino will succeed him as Twitter’s CEO. Analysts welcomed the move as an important one that will hopefully lead to Musk paying more attention to his core company, Tesla.

Musk stepping down as CEO of Twitter “would be positive for Tesla stock as it finally begins to remove the stranded albatross from the story,” Wedbush’s Dan Ives said in a note this week.

But Tesla investors are still looking beyond Musk’s leadership at the electric car maker at today’s meeting. Shareholders are appointed to vote on a motion for the company to publish a “key person risk” report that seeks to identify key persons and establish succession processes.

Musk said he plans to stay ahead of Tesla for as long as he can be useful. But he also publicly resented the role, claiming he’d rather be involved in product development. Tesla board member James Murdoch testified in a securities fraud trial last year that Musk had already named a successor — though he did not name the person.

Possible successors mooted are Zachary Kirkhorn, chief financial officer of Tesla, and former chief financial officer JB Straubel, who now runs battery recycling company Redwood Materials.

Tesla cited its reliance on Musk’s leadership as a potential risk. Proponents of the proposition of stakes argue for the main character They want to make sure that “the company will have qualified successors in mind who are ready to lead the company to success in the event of the departure of the key person” – that is, Musk.

But Tesla’s board is urging shareholders to vote down the measure, arguing that a clear succession plan would be “harmful to the interests of Tesla and our shareholders.” The board argues that the proposal could lead to competitors poaching Tesla’s top executives, while those not named as successors could be more incentivized to leave the company.

The question of who will succeed Musk at Tesla has hovered over the company for a number of years now. But the urgency around the question intensified as Musk divided his time between new ventures, including the $44 billion acquisition of Twitter. The appointment of a new CEO for the social media company has helped assuage some of those concerns — but the question remains about who can fill Musk’s place in a company that has become defined by his personality.

The board’s resistance to a key person’s risk proposal will likely ensure that it does not reach the votes it needs to pass. Tesla also has a strong number of retail investors who participate in shareholder meetings, many of whom tend to follow Musk’s guidelines and recommendations when it comes to voting.

In the run-up to today’s meeting, Musk posted a number of tweets which have been criticized as racist and antisemitic. He claimed that George Soros, a billionaire investor who has been a frequent target of anti-Semitic conspiracy theories, “hates humanity”. (The Anti-Defamation League said Musk’s comments would “embolden extremists,” According to CNN. Musk’s tweet didn’t mention the fact that Soros had just sold his entire stake in Tesla, which totaled just over 300,000 shares.

Musk has also been promoting misleading graphics on Twitter suggesting that the media is focusing almost exclusively on white-on-black crimes, a common “dog whistle” among racist groups.

It’s bad timing on Musk’s part, considering all of the critical issues at Tesla that need to be addressed. In addition to questions about succession, the company is also facing a price war with its competitors and shrinking profit margins. Tesla’s long dominance of the electric car market is more shaky than ever, dropping to 60 percent in the first quarter from 72 percent a year earlier.

Supporters of Tesla’s clear succession plan are unlikely to talk about Musk’s antics on Twitter during a shareholder meeting. But if the company’s financial position continues to weaken, it’s safe to assume that anything is on the table going forward.