What could be called an unexpected, bold move, Tesla CEO Elon Musk now wants to secure 25% of voting control over the electric vehicle giant when currently he only holds 12% of the firm's stocks. This touched off waves of discussions within the business and investment communities—from the concerns of corporate governance to what all of this really means for Tesla in the future.
The visionary entrepreneur and business maverick behind some very ambitious ventures and offbeat approaches to business took to a volley of tweets and public statements, saying, "Unless I have 25% voting control of Tesla, I would prefer to build products outside of Tesla." All manner of investors, analysts, and Tesla buffs are left speculating over what this could bode for the leadership and strategic direction of the company.
Tesla was founded in 2003, and the unprecedented success that the company has under the presidency of Musk makes him reign supreme in all matters of electric vehicles. The Tesla stock performance threw him to world wealth rankings. His most recent bid to increase voting control has met scrutiny from many, especially regarding concentrated decision-making power in the company.
Currently, Musk owns about 12 percent of Tesla—making him that company's largest individual shareholder. His voting power doesn't rise directly with his ownership percentage, though, because Tesla maintains a tiered structure that doles out additional votes to particular shareholders, including Musk. His proposal would boost his voting control to 25 percent. That would give him an outsized say in Tesla's strategic decisions and executive appointments.
Mixed responses have been received on the announcement. Where most investors and analysts are still optimistic about his vision, borrowing from the past record of innovation and success with Tesla, many are concerned about the rising concentration of power and how eventually it would impact corporate governance.
There has been complete silence on this recommendation, as the board of directors at Tesla remains tight-lipped over Musk's tweet. Corporate governance experts say it could open the door to fresh review of Tesla's governance practices and put institutional investors in control of rebalancing power.
That could also attract the attention of the Securities and Exchange Commission, which is charged with making sure the markets are fair. That history complicates things now, not least within the context of Musk's other run-ins with the SEC—including a 2018 settlement over controversial tweets.
As the drama unfolds, investors and others will zero in on official reactions from Tesla's board, potential regulatory action, and how Musk's pursuit for more voting control rattles the stock and broader strategy. Again, with Musk's unique style of leadership, Tesla is at the forefront as stakeholders await the next unfolding steps in this corporate saga.
