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BlackRock joins Tesla shareholders to remove Musk as chairman

It seems a significant chunk of the shareholders of electric carmaker Tesla (TSLA) find Elon Musk’s innovative and sometimes unconventional ideas not convincing. Earlier this week, the company’s market value took a beating after the outspoken CEO failed to find common ground with investors on taking the company private.

In an interesting turn of events, a section of Tesla shareholders whose proposal to strip Musk of the chairman’s post got rejected recently have found a supporter in BlackRock (BLK), one of the top ten Tesla shareholders.

Funds operated by the asset management company this week voted in support of the proposal made by Tesla shareholders a couple of months ago to divide Musk’s responsibilities by appointing an independent director as chairman of the company’s board of directors. According to BlackRock, which holds about 4% of Tesla shares, the reaction is in line with its policy to ensure long-term shareholder value for clients.

Funds operated by BlackRock this week voted in favor of a proposal by Tesla shareholders to divide Musk’s responsibilities

Earlier, a communiqué from Tesla showed that about 17 million shareholders including some major investors voted in favor of the independent-chair proposal, while more than 86 million voted against it. Musk’s dual roles – as chairman and chief executive officer – has been under scrutiny for quite some time, with market watchers and corporate governance watchdogs raising concerns that the billionaire businessman holding multiple positions might undermine the company’s operational efficiency.

Supporters of the proposal, who believe Musk’s pay is too high, stressed the importance of the board functioning ‘independently’, while others claimed that Tesla owed its success to Musk’s persistent involvement in its daily affairs.

RELATED: Musk blames short-sellers for poor health

Despite being the center of many controversies, an unperturbed Musk continues with his often-bizarre rants, making headlines and at the same time casting doubts over Tesla’s future. In the latest such episode, Musk announced on the social media that he was planning to take Tesla private, only to make a U-turn later and scrap the idea.

Another bone of contention between the CEO and the other stakeholders is the massive spending that continues to weigh on the company’s cash flow.

Tesla’s shares suffered a significant loss over the past twelve months. Continuing the losing streak, the stock dropped about 1% during Friday’s regular session.

RELATED: Musk abandons ‘take-private’ plan

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