Tesla's co-founder and former tech chief Straubel returns as a board member

Tesla Inc. nominated JB Straubel, a co-founder and former senior executive, to join its board of directors as part of a broader reshaping of the carmaker’s senior management structure.

Straubel would replace Hiromichi Mizuno, who won’t seek reelection, Tesla said in its proxy statement filed Thursday. The company has also named Tom Zhu, who was the driving force behind its Shanghai plant, as its senior vice president for automotive operations.

The proposal to elect Straubel is one of five issues the company has asked investors to consider at its May 16 annual meeting. The proxy contains just one shareholder proposal, in contrast to the eight that investors voted on last year.

That sole shareholder resolution comes from Karen Róbertsdóttir, an investor in Reykjavik, Iceland, who wants Tesla’s board of directors to prepare and publicly disclose a report on Tesla’s key-person risk.

Tesla has regularly said in filings that it is “highly dependent on the services of Elon Musk,” the company’s longtime CEO, but has never disclosed plans to protect shareholders in the event he was to leave the role.

Tesla urged investors to vote against the proposal, arguing it’s unnecessary and would make the company less competitive by highlighting top personnel who competitors might want to poach. The Austin, Texas-based EV maker has just four named executives, including Zhu: Musk, CFO Zachary Kirkhorn and Drew Baglino, Tesla’s senior vice president of powertrain and energy engineering.

Tesla’s board has eight members, the longest-tenured of which are Musk and his brother, Kimbal Musk. The other directors are Mizuno, Robyn Denholm, Ira Ehrenpreis, Joe Gebbia, James Murdoch and Kathleen Wilson-Thompson.

Straubel's expertise

By adding Straubel, Tesla can bolster its expertise in clean technology, the company said. Tesla’s former chief technology officer left in 2019 and founded Redwood Materials Inc., a battery-recycling and circular supply chain company in Nevada. His nomination to the board comes as Tesla seeks to make its own batteries in-house and selling a growing number of energy-storage systems to homeowners and utilities.

The company didn’t give a reason for the departure of Mizuno, a United Nations special envoy for finance and sustainable development. He’s been on the board since 2020.

While Musk famously doesn’t take a salary from Tesla, he’s still among the world’s top-paid CEOs thanks to an unprecedented 2018 pay package, according to data compiled by Bloomberg.

The remuneration deal, worth more than $50 billion, led to an explosive growth in his wealth and helped him seal his status as the second-richest person in the world, according to the Bloomberg Billionaires Index. The pay package included 12 installments of stock awards. Each installment was tied to several distinct financial targets.

Musk’s compensation has been controversial and the subject of a lawsuit by a shareholder who alleged that the board failed to exercise independence from Musk as it drew up the deal. In November, Musk testified in the trial of the case in the Delaware Court of Chancery; the judge’s decision is still pending.

The executive again didn’t take home a salary in 2022, the filing said.

Collateral limited

The proxy also gives an update to the number of shares Musk has pledged as collateral for debt he’s taken on — about 238 million, or 58 percent of his total shares. That percentage is up from 52 percent of his shares as of the last time Tesla filed its annual report in August 2022, when he had about 268 million shares pledged. The filing also includes information about a change to its pledging policy, capping the loan amount that Musk can pledge.

Musk has never been a full-time CEO for Tesla. He also oversees SpaceX and Twitter Inc., which he purchased for $44 billion in October, and founded the Boring Company and Neuralink Corp.

The carmaker’s proxy says that Twitter is “party to certain commercial and support agreements with Tesla. Under these agreements, Twitter incurred expenses of approximately $1 million in the aggregate in 2022.”