Tesla Inc (Nasdaq: TSLA) CEO Elon Musk has taken a lot of heat for his infamous “funding secured” tweet earlier this month. A new Security and Exchange Commission filing by BlackRock (BLK), one of Tesla’s 10 largest shareholders, has revealed that BlackRock wanted to replace Musk with a new chairman even before his deal to take the company private fell through.
On Thursday, a BlackRock SEC filing revealed that BlackRock-managed funds voted in favor of removing Musk from the chairman role during a shareholder vote in June. The vote to replace Musk with an independent chairman, which would not have impacted Musk’s position as CEO, was ultimately voted down by a vote count of roughly 86 million to 17 million.
“BlackRock’s approach to investment stewardship is driven by our fiduciary duties to our clients, the asset owners,” a BlackRock spokesperson said.
At the time, the push to remove Musk as chairman was based on factors such as his refusal to answer analyst questions on Tesla’s first-quarter earnings call and Tesla’s consistent inability to hit Model 3 production targets. However, criticism of Musk’s leadership has ramped up in the past month after Musk suggested on Aug. 7 that he had “funding secured” to take Tesla private at a price of $420 per share. Musk officially abandoned his plan last week after learning that a majority of Tesla shareholders opposed the deal.
Some analysts have said the drama surrounding the privatization deal, including shareholder lawsuits and an SEC investigation into potential stock price manipulation, was an unnecessary and unwanted distraction for Tesla during a critical time for the company. Musk has said the third quarter will be Tesla’s first profitable quarter in the company’s history, but Tesla reported a record net loss of more than $718 million in the second quarter.
BlackRock is not the only one questioning Elon Musk’s leadership. This week, Canaccord Genuity analyst Jed Dorsheimer said the recent distractions are among several “self-inflicted problems” that have increased the risk profile of TSLA stock.
“We believe the drama associated with this endeavor, which includes tweeting ‘funding secured,’ is a great example of why even a great company may need different leaders during its life cycle,” Dorsheimer said.
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