Board members would serve for two years rather than three
Tesla Inc. set its shareholder meeting for Oct. 7 at the Fremont, Calif., factory, with a call for reducing its directors’ terms among the proposals the electric-car maker will bring to the table, the company said in filing late Friday.
One of the proposals calls for each director’s term to be reduced from three years to two years. Tesla’s board currently has nine members who are divided into three classes in staggered three-year terms.
If the proposal is approved, however, the board will be divided into two classes with staggered two-year terms, with directors distributed as equally between the classes as possible, Tesla said in the filing.
The board would be reduced to eight members, since Antonio Gracias, a venture capitalist who has served on the Tesla board since 2007, said in 2019 he’d not be seeking reelection when his term ends this year.
Tesla’s board nominated current board members James Murdoch, the youngest son of News Corp founder Rupert Murdoch, and Kimbal Musk, Chief Executive Elon Musk’s brother, for re-election as class II directors, with terms expiring in 2024. If the term reduction is approved, then their terms would end in 2023, the company said.
Tesla’s curtailing board member terms was a response to a shareholder proposal calling to elect each board member for one year.
The two-year term, however, “strikes a suitable balance to the long-term interests of and nearer-term accountability to our stockholders at this time,” Tesla said.
Tesla shares were flat in after-hours trading after ending the regular trading day down 0.7%. The stock has gained 1.6% this year, compared with gains of around 19% for the S&P 500 index.