Tesla adds directors in move to diversify board

Bloomberg

Tesla Inc. moved to diversify a board that some investors have complained is too closely tied to Chief Executive Officer Elon Musk, adding two executives from major media companies.
James Rupert Murdoch, the CEO of Twenty-First Century Fox Inc., and Linda Johnson Rice, the chairman of Johnson Publishing Co., joined Tesla’s board effective Thursday, according to a filing. Murdoch is the son of Fox Co-Chairman Rupert Murdoch, and Rice has chaired the publisher of Ebony and Jet magazines since 2010.
The two new board appointments come after months of pressure from a group of pension funds that urged Tesla to add more independent directors and hold elections for its directors annually, instead of every three years. Though the yearly vote push failed, the company did seek to hire directors who lacked connections to Musk, either through his rocket maker SpaceX or SolarCity, the company that was run by his cousin until Tesla’s controversial acquisition last year.
“It’s certainly a step in the right direction,” Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management, said in a phone interview. “It’s nice that they’re bringing more diversity of backgrounds in there. It’s great to have people who are not just coming from an engineering mindset.”
In April, the California State Teachers’ Retirement System and four other investors wrote a letter to Antonio Gracias, Tesla’s lead independent director, saying the board needed more independent members. Musk said on Twitter shortly thereafter that Tesla would be adding new board members and that the planned board expansion had nothing to do with the pension funds.

MORE REFORMS
While it was critical for Tesla to add independent directors, the board should consider more changes to win over critics, including doing away with staggered elections, said Dieter Waizenegger, the executive director of CtW Investment Group, which represents union pension plans that hold Tesla shares. “There are more reforms that are necessary to make this a more shareholder-accountable board,” he said by phone.
Tesla fell 2.5 percent to $319.57 at the close of trading Monday, after Minnesota police released a statement Sunday saying a driver crashed his car using the company’s Autopilot driver-assistance system. Musk on Monday tweeted a copy of an email that the driver sent late Sunday to the investigating officer, clarifying that he believed he disengaged Autopilot shortly before the accident occurred.

DIRECTORS’ EXPERIENCE
James Murdoch, 44, was CEO of News International when the News Corp. division was embroiled in a phone-hacking scandal in 2011. He leads Fox with his brother Lachlan, who is executive co-chairman, and their father Rupert. Their biggest focus now is trying to complete the takeover of broadcaster Sky Plc, after a failed attempt six years ago.
Johnson Rice is chairman and CEO of both Johnson Publishing and Fashion Fair Cosmetics. She’s a director for advertising company Omnicom Group Inc. and food-delivery service operator GrubHub Inc. and has served previously on the boards of companies including Bausch & Lomb Inc., Quaker Oats Co. and Kimberly-Clark Corp.
Tesla’s board had been comprised of Musk, his brother, Kimbal Musk; Gracias, the founder of a private-equity firm and a director at Musk’s rocket company SpaceX; Ira Ehrenpreis, a venture capitalist and SpaceX investor; Brad Buss, a former SolarCity chief financial officer; Steve Jurvetson, a venture
investor and SpaceX director;
and Robyn Denholm, the chief operating officer of Telstra Corp., Australia’s largest telecommunications company.