Tesla Inc. (NASDAQ:TSLA) has resorted to adding new members into its executive board. The two new members who were proposed were said to meet one main criterion, which is that they should not have any close ties with CEO Elon Musk. This followed the proposal from the directors of this renowned electric carmaker. The reason for this move is still not clear to many.
Among those who were selected and were considered to meet the criterion include James Rupert Murdoch who is the current CEO of the Twenty-First Century Fox Inc. (NASDAQ:FOXA) and the Chairman of Johnson Publishing Corporation, Linda Johnson Rice.
Does Car Industry Experience Matter?
According to a Tesla company blog post, the two distinct leaders are expected to join the board of directors soon. The move is said to be easy but many are still not aware of the strategies behind it. On the other hand, the new board members are said to be independent but according other parties such as the BoardEx, the two new members lack experience as far as the car manufacturing industry is concerned.
It is also said that the two lack solid ties with the technology industry. But many businesses have argued that leadership is not dependent on whether one has proper experience in the industry or not.
Root Cause of Recruiting Two Independent Members
The move towards including independent directors come soon after Tesla suffered a huge blow after a large proportion of its minority investors voted for the need to bring in more independent directors who have no close ties with the current CEO. Different sources have speculated that this move is aimed at “improving managerial practices, accountability as well as transparency in the company”. This follows after the California State Teachers’ Retirement Systems (CalSTRS) wrote a letter to Tesla investors expressing the need for more independent members in the board of directors’ platform.
The letter also expressed the need that “Directors should be held to a higher standards of independent given the conflicts of interest that permeates this board.” It also expressed the need for independent board which check on the possible dysfunction group dynamics.
Tesla Stock closed yesterday’s session at $328.24 which was an increase of $ 8.67 or (2.71%).
