Tesla nominates ex-CTO JB Straubel to board of directors

Tesla has nominated JB Straubel, CEO and founder of e-waste recycling company Redwood Materials, to its eight-member board of directors, according to an SEC filing Thursday. Straubel founded his recycling venture in Carson City, Nevada, while still Tesla’s CTO in 2017, and left the automaker to focus on it in 2019.

Straubel is considered a co-founder of Tesla due to his engineering and operational leadership at Tesla from the beginning. Joining the company in 2004 — long before Elon Musk took the reins as CEO — Straubel oversaw the construction of Tesla’s first battery factory outside of Reno, among other things.

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If he wins the shareholder vote, Straubel will replace current Tesla board member Hiromichi Mizuno, who does not plan to run for re-election at the company’s annual shareholder meeting, scheduled for May 16.

Mizuno was previously the Chief Investment Officer of the Japanese Government Pension Investment Fund and has been a member of Tesla’s board since April 2020. Mizuno was a member of Tesla’s audit committee.

In addition to Straubel, Tesla nominated CEO Elon Musk and Chairman Robin Denholm to be re-elected to the board of directors.

According to its annual report, Tesla is also asking investors to re-approve Pricewaterhouse Coopers (PwC) as the company’s auditor and to vote on two different issues related to executive compensation.

Only one proxy proposal submitted by a stockholder will be eligible for voting in May. Shareholders suggested Tesla provide investors with a “key person risk” report, identifying how the company would handle the departure of key executives for any reason, from retirement to premature death or disability.

Of particular concern is Tesla’s dependence on CEO Elon Musk. The company has previously repeatedly said in financial filings that it is “highly reliant on the services” of Musk.

Since last fall, many Tesla investors have criticized Musk for his decision to sell his billion-dollar Tesla stake to buy Twitter for $44 billion. Musk appointed himself and remains CEO of the social media platform and authorized high-ranking Tesla employees to work with him there as well.

Tesla CEO James Murdoch testified in court that Musk had privately discussed with him a potential successor to lead the electric vehicle business. But some investors are still looking for answers about key man risk.

The proxy statement notes: “According to a 2018 Morgan Stanley report, in 2017, 59 S&P 500 CEOs left their companies, and those companies then underperformed the market by 11% over the following 12 months.”

Tesla’s board asks shareholders to vote against the key person risk report. They wrote in opposition to the proposal, arguing that disclosures demanded by shareholders — such as identifying executives most important to Tesla’s long-term success and who might replace them — would invite competitors to “target and hire high-value executives away from by Tesla”.