Tesla Opens Up About Mysterious Payment to a Board Member's Firm
(Bloomberg) -- A private equity firm linked to a Tesla Inc. director spent more than 100 days at the carmaker’s battery factory late last year to help increase Model 3 sedan production, according to a filing vouching for its beleaguered board.
Valor Management Corp., whose founder and chief executive is Tesla’s lead independent director Antonio Gracias, contributed to “numerous improvements that led to increased Model 3 production rates,” Tesla said in the filing Tuesday. The carmaker said it paid Valor $34,347 to reimburse for travel, equipment and “budget lodging” near the Nevada factory.
Tesla is defending its board from a campaign by CtW Investment Group, an activist group working with union pension funds that oppose the re-appointments of Gracias and two other directors. In siding with CtW and recommending that investors vote against Gracias, proxy adviser Institutional Shareholder Services said the payment Tesla had disclosed making to Valor compromised his independence.
The filing elaborates on what was a vague disclosure in Tesla’s proxy statement released April 26, which described the payment to Valor as being for consulting services related to “operational optimization.” Tesla said then that $34,347 was an immaterial cost and that the services were “provided on an arm’s length basis to Tesla.” The board concluded that it didn’t impede Gracias from making independent judgments as a director.
The Tuesday filing said that Gracias supported and was personally involved in having Valor’s senior operations team help Tesla at the gigafactory near Reno, Nevada.
CtW also opposes the re-appointments of Tesla directors Kimbal Musk, the brother of CEO Elon Musk and a food entrepreneur; and James Murdoch, the CEO of Twenty-First Century Fox Inc. The filing released Tuesday is a slide deck listing the credentials of the three directors and a series of Tesla’s accomplishments.
Tesla said that its mission to accelerate the transition to sustainable energy products “requires a board willing to commit to long-term goals.”
Since handing over the first Model 3s to employees in July 2017, Tesla has pushed back production goals for the car several times, citing issues with battery-pack output at the gigafactory and with automating assembly lines.
On Friday, Musk tweeted that the company was making progress toward boosting production in all four zones of the gigafactory.
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