Tesla stockholders to consider removing Musk as chairman

A proposal has been submitted by Tesla shareholder Jing Zhao, that would replace company co-founder and CEO Elon Musk with an independent director to act as chairman of the board.

In making his case for the change, Zhao wrote: "Although the current leadership structure, in which the positions of Chairman and CEO are held by one person, now in this much more highly competitive and rapidly changing technology industry, it is more and more difficult to oversee Tesla's business and senior management (especially to minimize any potential conflicts) that may result from combining the positions of CEO and Chairman."

He added, "In the United States, too, many big companies already have or are beginning to have an independent Board Chairman. Tesla should not be an exception."

Zhao holds 12 shares of Tesla's common stock. He further mentioned that Musk could also have potential conflicts down the road, given the billionaire's other business ventures, namely SolarCity and SpaceX.

Tesla's board released a statement encouraging shareholders to vote against Zhao's proposal, saying, "The Board believes that the Company's success to date would not have been possible if the Board was led by another director lacking Elon Musk's day-to-day exposure to the Company's business.

In light of the significant future opportunities for growth and the careful execution needed in order for the Company to achieve it, the Board believes that the Company is still best served by Mr. Musk continuing to serve as Chairman."

Further, the board pointed out that 72 percent of the companies in the S&P 500 do not, in fact, have an independent board chairman.

The electric car company has faced challenges this year, such as production delays for the Tesla Model 3. March ended up being its roughest month ever as the firm's share price dropped following negative comments from analysts.

Musk co-founded Tesla in 2003.