While the public grumblings over whether Elon Musk is qualified to lead Tesla, have been growing in recent weeks in the aftermath of the CEO’s increasingly erratic public behavior and statements, one especially powerful name – in fact the world’s largest asset manager – voted for a shareholder proposal to replace chairman Elon Musk with an independent director: BlackRock.
According to Reuters, a BlackRock filing with the SEC showed that BlackRock-managed funds voted for a measure requiring the board chairman to be an independent director. Ultimately, the proposal was killed, when more than 86 million shares voted against it at the June shareholder meeting while fewer than 17 million voted in favor, but today is the first time that it emerged that BlackRock was one of the entities voting for.
“BlackRock’s approach to investment stewardship is driven by our fiduciary duties to our clients, the asset owners,” a BlackRock spokeswoman said in an emailed statement. “Our approach to engaging with companies and proxy voting activities is consistent with our commitment to drive long term shareholder value for our clients.”
Blackrock was not the only one to object: top proxy adviser Institutional Shareholder Services also supported the proposal, citing concerns about Musk’s pay and board independence, which in retrospect should have been heeded.
Musk, whose recent public disclosures have drawn sharp scrutiny from both the investing public and the SEC in the aftermath of the “going private” debacle – serves both as Tesla’s chairman and chief executive officer, and some corporate-governance activists have called for the role to be split between two people to improve oversight. Today is the first time it emerged that BlackRock was one of them.
Tesla’s board – which in recent days has also attracted attention for being too close to Musk and may itself be in jeopardy over its handling of “funding secured-gate” – had said that the company’s success “would not have been possible” without Musk’s “day-to-day exposure to the company’s business.”
It may have to change its tune, however, as more investors side with Blackrock, which is the 7th largest Tesla stockholder and controls nearly 6.5 million of Tesla’s 170 million shares.
On the other side of the aisle, Vanguard Group-run funds voted against the independent-chair proposal, a recent filing showed. Funds run by Fidelity Investments sided with Tesla on director votes and other controversial items this spring, earlier filings showed.
Tesla is not the only company where BlackRock tried to bring more balance to the org chart: filings also showed it voted this year in favor of shareholder proposals at Facebook and Google parent Alphabet to give each shareholder an equal vote on governance matters. BlackRock withheld votes or voted against nearly all management recommendations at Netflix Inc, including an advisory vote on executive pay.
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