Tesla has filed Form 8-K with the SEC, setting forth a new rule regarding who can be appointed to its Board.
Over the past year, none other element of Tesla's corporate structure has come under more fire than its Board of Directors - aside from Elon Musk himself. When Tesla stock fell in the second half last year, there was mounting pressure on them to act quickly but instead gave approval for CEO Elon Musk's plans to continue. Now Tesla has introduced a new rule allowing Directors to be nominated after receiving many applications.
Sawyer Merrit first learned of the rule change through Twitter. This change is part of a larger 8K filing with the Securities and Exchange Commission in America that outlines how Board members can now be nominated and what requirements must be fulfilled for nomination.
According to Tesla's 8K filing, any shareholder or group of investors who owned at least 3.3% of Tesla's outstanding shares for at least three years can now nominate someone to its Board of Directors. These nominees could then be elected or appointed depending on their size at the time.
Nominating a Board member does not guarantee them a seat on that board. Each nominee must meet certain criteria in order to be nominated, then shareholders will vote to decide if they are worthy of being appointed. Technically, Tesla can open as many Board seats as it wishes; however, the 2-20% rule would limit what number of Board seats candidates could potentially compete for.
The Tesla Board has recently undergone a restructuring during a time when investors are eager to join and also amid political and public unrest. Recently, Elon Musk's controversial personality has been raised as potentially jeopardizing the brand; some government officials even expressed doubt about whether or not the Board can fulfill its fiduciary duty under such circumstances.
