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GOVERNANCE

Tesla heeds investors’ call for more independent board directors

Tesla Inc. is actively searching for independent board directors and could announce new additions soon, said a Tesla spokesman in an email Wednesday.

“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,” according to the spokesman. Further information was not provided.

Investors have been urging Tesla to strengthen its corporate governance. In a letter Monday to Tesla's lead independent director, Antonio J. Gracias, the $202.1 billion California State Teachers' Retirement System, West Sacramento; $30.1 billion Connecticut Retirement Plans & Trust Funds, Hartford; the office of the New York City Comptroller Scott M. Stringer, fiduciary for the $169.8 billion New York City Retirement Systems; CtW Investment Group; and Hermes Equity Ownership Services urged Mr. Gracias and the rest of the board to recruit two new directors who do not have prior personal or professional ties to CEO Elon Musk, and to hold annual director elections.

“While meeting the technical definition of independence, five of six current non-executive directors have professional or personal ties to Mr. Musk that could put at risk their ability to exercise independent judgment,” the five investors wrote in Monday's letter. “A thoroughly independent board would provide a critical check on possible dysfunctional group dynamics, such as groupthink.”

“We regularly engage with our shareholders and value their feedback,” Tesla's spokesman added.

A proposal from the Connecticut retirement plans calling for annual director elections is expected to be voted on at the company's annual shareholder meeting.