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(Bloomberg) — Tesla Inc. is asking shareholders to put its former chief technology officer, JB Straubel, on its board of directors, part of a reshaping of the carmaker’s senior management structure, according to a proxy statement filed Thursday.
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Straubel would replace Hiromichi Mizuno, who said he won’t seek reelection. The company has also named Tom Zhu, who was the driving force behind Tesla’s Shanghai plant, as its senior vice president for automotive operations.
The proposal to elect Straubel is one of five issues the company has asked investors to consider at its May 16 annual meeting. The proxy contains just one shareholder proposal, in stark contrast to the eight that investors weighed in 2022.
That sole shareholder resolution comes from Karen Róbertsdóttir, an investor in Reykjavik, Iceland, who wants Tesla’s board of directors to prepare and publicly disclose a report on Tesla’s key-person risk. Tesla has regularly said in filings that it is “highly dependent on the services of Elon Musk,” the company’s longtime chief executive officer, but has never disclosed how it would address his absence.
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Tesla urged investors to vote down the proposal, arguing it’s unnecessary and would make the company less competitive by highlighting top personnel who competitors might want to poach. The Austin, Texas-based electric-vehicle maker has just four named executives, including Zhu: Musk, Chief Financial Officer Zachary Kirkhorn and Drew Baglino, Tesla’s senior vice president of powertrain and energy engineering.
Read More: Tesla’s Board Takes More Heat Over Musk Succession Planning
Tesla’s board has eight members, the longest-tenured of which are Musk and his brother, Kimbal Musk. The other directors are Mizuno, Robyn Denholm, Ira Ehrenpreis, Joe Gebbia, James Murdoch and Kathleen Wilson-Thompson.
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By adding Straubel, Tesla can bolster its expertise in clean technology, the company said. Straubel, a co-founder of Tesla, left in 2019 and founded Redwood Materials Inc., a battery recycling and circular supply chain company in Nevada. His nomination to the board comes as Tesla seeks to make its own batteries in-house and moves beyond cars to selling a growing number of energy storage systems to homeowners and utilities.
The company didn’t give a reason for the departure of Mizuno, a United Nations special envoy for finance and sustainable development. Mizuno has served on the board since 2020.
Controversial Compensation
While Musk famously doesn’t take a salary from Tesla, he’s still by far among the world’s top-paid CEOs thanks to an unprecedented 2018 pay package, now known as the moonshot award, according to data compiled by Bloomberg.
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The remuneration deal, worth more than $50 billion, led to an explosive growth in his wealth and helped him seal his status as the second-richest person in the world, according to the Bloomberg Billionaires Index. The pay package included 12 tranches of stock awards. Each tranche was tied to several distinct financial targets.
Musk’s compensation has been controversial and the subject of a lawsuit by a shareholder who alleged that the board failed to exercise independence from Musk as it drew up the deal. In November, Musk testified in a trial about the case in the Delaware Court of Chancery; the judge’s decision is still pending.
Read More: Musk $55 Billion Tesla Pay Allegedly Marred by Conflicts
The executive again didn’t take home a salary in 2022, the filing said. The proxy also gives an update to the number of shares Musk has pledged as collateral for debt he’s taken on — about 238 million, or 58% of his total shares. That percentage is up from 52% of his shares as of the last time Tesla filed its annual report in August 2022, when he had about 268 million shares pledged. The filing also includes information about a change to its pledging policy, capping the loan amount that Musk can pledge.
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Related-Party Transactions
Musk has never been a full-time CEO for Tesla: He also oversees SpaceX and Twitter Inc., which he purchased for $44 billion in October. Additionally, Musk spends time on other ventures, including the Boring Company and Neuralink Corp.
Tesla’s latest proxy says that Twitter is “party to certain commercial and support agreements with Tesla. Under these agreements, Twitter incurred expenses of approximately $1 million in the aggregate in 2022.”
The resolutions will be voted on at Tesla’s annual shareholder meeting on May 16. Last year, Tesla proposed in its proxy a 3-to-1 stock split, the second in less than two years, which was subsequently approved shareholders.
—With assistance from Sophie Alexander and Brian Chappatta.
(Updates with details starting in seventh paragraph.)
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