A group of Tesla Inc investors has urged the luxury electric car maker to add two new independent directors to its board who do not have any ties with Chief Executive Elon Musk and "provide a critical check on possible dysfunctional group dynamics."
Led by the enigmatic Musk, Silicon Valley's automaker has quickly become the most valuable U.S. car company, passing General Motors Co for the top spot.
Continue Reading Below
Over the past month, Tesla stock has surged 35 percent as investors bet that Musk will revolutionize the automobile and energy industries.
In a letter dated Monday, five investment groups including the California State Teachers Retirement System, Hermes Equity Ownership Services and CtW Investment Group urged Tesla to have all of its directors re-elected annually.
"We expect that as companies make the transition to publicly-traded status, the governance structures and practices in place at the time of the IPO will evolve to align with the company's changing strategy," the letter reads. "However, Tesla's seven-member board is largely unchanged from its pre-IPO days."
Among those on Tesla's board is Kimbal Musk, the CEO's brother, and Brad Buss, who served as chief financial officer at SolarCity Corp, which the electric car maker acquired last year.
The $2 billion stock deal for the money-losing installer of residential solar power systems, prompted a 13 percent fall in Tesla's share price after Musk outlined it last June.
"We regularly engage with our shareholders and value their feedback," a Tesla spokesman said. "We are actively engaged in a search process for independent board members, which is something we committed to do several months ago, and expect to announce new additions fairly soon."
The Palo Alto, California-based company is rushing to launch its mass-market Model 3 sedan in the second half of this year and quickly ramp up its factory to hit a production target of 500,000 cars per year in 2018.
Last year it sold 76,230 vehicles, missing its target of at least 80,000 cars sold. By comparison, GM sold 10 million cars and Ford Motor Co sold 6.7 million.
Tesla shares were down 1.9 percent at $302.85 in early afternoon trading on Nasdaq.
(Additional reporting by Vishal Sridhar in Bengaluru; editing by Saumyadeb Chakrabarty, G Crosse)