STORY CONTINUES AFTER THESE SALTWIRE VISUALS
SAN FRANCISCO, Calif. (Reuters) – Proxy advisory firm ISS recommended that Tesla investors vote against Robyn Denholm’s re-election as board chair on Wednesday. The firm cited concerns over a lack or scrutiny regarding the pledge of certain company shares by Elon Musk and Kimbal Musk.
ISS reported that Tesla investors are at risk if they pledge shares or use them as collateral to secure loans. This is because the value of the shares pledged by Musk, his brother, and the likelihood of future increases will increase, ISS stated in a recent report.
“Pledging is a risk for ordinary shareholders. The likelihood of a forced sales of pledged shares also increases when the value of collateral (and the price of the shares) are already falling,” ISS stated.
Tesla shares have fallen by about 60% since their record high in November 2021.
ISS reported that Elon Musk pledged 58% of Tesla shares.
Musk did not immediately respond when Reuters asked for a comment. In January, he said that firms such as ISS and Glass Lewis have “far too much influence.”
Tesla limits the amount of stock that can be pledged. The maximum loan is $3.5 billion, or 25% of total stock value.
ISS recommends voting for Musk and JB Straubel, co-founder of Tesla.
Glass Lewis, an advisory firm that advises Tesla shareholders on voting issues, recommended last month that Tesla shareholders vote against Straubel because of concerns about his independence since he was Chief Technology Officer at Tesla from 2019 until now.
Tesla’s annual shareholder meeting will be held on May 16, 2019.
Reporting by Hyunjoo Ji; Editing by Sandra Maler & Stephen Coates