Tesla Inc. is not the “private plaything” of Elon Musk and its board needs to ensure that the billionaire chief executive’s “hardcore” focus on Twitter doesn’t conflict with his role at the electric-car maker, Sen. Elizabeth Warren wrote the company’s chair on Monday.
“ ‘It remains unclear whether the Tesla Board – which has key decision-making authority within the company – is adequately governing the company.’ ”
In a letter to Tesla TSLA, +0.31% Chair Robyn Denholm, Warren said she was writing over concerns that the board has failed to meet its legal duty of ensuring that its CEO “does not treat the company as a private plaything.” Denholm was named chair of Tesla after a 2018 settlement with the Securities and Exchange Commission that required him to give up the role of either chairman or CEO, a move that was seen as an attempt to strengthen Tesla’s board.
“Your legal responsibility is to serve as a prudent fiduciary for shareholders and to oversee the management of [Tesla’s] business,” Warren wrote Denholm. “That responsibility includes ensuring that Mr. Musk is an effective CEO and that he fulfills his legal obligation to act in the best interests of Tesla and all of its shareholders, not just himself.”
“The fact that Mr. Musk was, until recently, the world’s richest man does not absolve him of those legal responsibilities or provide assurances that he will meet them,” Warren said in an apparent dig at Musk, who recently lost his title as the world’s richest person to LVMH LVMH, -1.38% Chair and CEO Bernard Arnault as Tesla shares have dropped 35% since Musk closed on his $44 billion purchase of Twitter.
Musk has reportedly used employees of Tesla — as well as his other companies, such as SpaceX — at Twitter, as he seeks to reshape the social-media company that he personally acquired for $44 billion in late October. He has sold billions in Tesla stock, which has been seen as a catalyst for a large decline in the stock, and prominent Tesla investors have called for a new CEO at the electric-vehicle maker in response.
“Despite widespread concerns about Mr. Musk’s acquisition of Twitter while serving as CEO of Tesla, it remains unclear whether the Tesla Board – which has key decision-making authority within the company – is adequately governing the company or if it has established clear rules and policies to address the risks to Tesla posed by Mr. Musk’s dual roles,” Warren wrote.
Musk posted a poll on Twitter on Sunday asking if he should step down from running the social-media company, and 57.5% of more than 17.5 million polled called for Musk to step down.
Tesla shares fell 1.8% in Monday trading as the S&P 500 index SPX, -0.87% slipped 0.5% and the tech-heavy Nasdaq Composite Index COMP, -1.36% declined 1.1%. Tesla shares are down 58% year to date, compared with a 20% fall on the S&P 500 and a 32% drop on the Nasdaq.