TSLA Tesla Inc

By Tim Higgins 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 18, 2017).

Tesla Inc., which has faced criticism from its investors about a lack of independent directors, named 21st Century Fox Inc. Chief Executive James Murdoch and Ebony Media CEO Linda Johnson Rice to its board.

The appointments announced Monday expand Tesla's board to nine people, including the Silicon Valley auto maker's CEO, Elon Musk.

In April, Mr. Musk suggested Tesla would appoint two additional directors when he responded on Twitter to a group of investors, including the California State Teachers' Retirement System, that were calling for improved corporate governance. Among the changes, the investors requested Tesla recruit two new directors who don't have prior personal or professional ties with Mr. Musk.

Mr. Murdoch is the son of Rupert Murdoch, executive chairman of Fox and News Corp, publisher of The Wall Street Journal. James Murdoch, who also serves on the board of News Corp and is the chairman of Sky PLC, succeeded his father as CEO of Fox in 2015.

Ms. Rice, who had been chairman emeritus of Ebony Media Holdings, returned to run the holding company that includes Ebony magazine earlier this year after selling the family-owned Johnson Publishing last year. She has been active on other boards, including as a director for Omnicom Group Inc. since 2000 and GrubHub Inc. She becomes Tesla's second female director.

Dieter Waizenegger, the executive director of CtW Investments Group, which signed the April letter and represents union-sponsored pension funds that own about 200,000 Tesla shares, welcomed Ms. Rice's appointment, saying it adds diversity to the board. But Mr. Waizenegger raised concerns about Mr. Murdoch, citing his handling of the phone-hacking scandal at the U.K. newspaper unit of News Corp in 2011 when he was head of the international division, and more recently 21st Century Fox's controversy involving sexual-harassment claims at the Fox News Channel.

Mr. Waizenegger said those issues mean Mr. Murdoch isn't an ideal candidate "for a board that really needs to prove that it wants to take up shareholder accountability several notches," he said.

While Mr. Murdoch faced questioning by a U.K. parliamentary committee in the phone-hacking scandal, he wasn't accused of any wrongdoing. Mr. Murdoch in 2011 called the phone-hacking "a matter of serious regret," and has said he didn't know about or try to hide any wrongdoing in the matter.

At 21st Century Fox, the company has replaced much of the management at Fox News, has hired more women and minorities including a head of diversity outreach and provided sensitivity training for all employees at the network.

A spokesman for Mr. Murdoch referred questions to the auto maker. Tesla declined to comment beyond its announcement Monday.

A representative from Calstrs didn't have immediate comment. The second largest pension fund owns about 248,000 shares, or 0.15% of Tesla, according to the latest data from CapIQ.

Three other pension funds that signed the letter to Tesla declined to comment or didn't respond to requests.

Besides Mr. Musk, who is chairman, Tesla's board includes his brother; a former top executive for SolarCity Corp., where Mr. Musk has served as chairman; two longtime venture-capital investors in Tesla; a private-equity investor and a telecommunications executive.

Mr. Musk is under intense scrutiny as he races to ramp up production of the Model 3, a new $35,000 sedan that he expects will fuel massive sales growth next year. He has projected Tesla will make a total of 500,000 vehicles in 2018, up from about 84,000 last year.

Enthusiasm for the Model 3 has sent shares soaring more than 50% this year, though the stock has fallen in the past few weeks -- including 2.5% on Monday -- following disappointing second-quarter sales figures. On Saturday, Mr. Musk told a group of U.S. governors that he believed the company's market value was greater than Tesla deserved.

On Monday, Mr. Musk clarified his comments on Saturday, tweeting: "Tesla stock is obviously high based on past & present, but low if you believe in Tesla's future. Place bets accordingly."

He also on Monday sought to put to rest news about a crash in Minnesota involving Tesla's semiautonomous Autopilot system. The driver of the 2016 Tesla car, which rolled over in a marsh, slightly injuring the four passengers, originally told police he engaged the car's semiautonomous system and the vehicle then suddenly accelerated. However, Mr. Musk posted an email he says is from the driver stating he believed he had disengaged Autopilot at the time of the crash. The driver couldn't immediately be reached for comment.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

July 18, 2017 02:47 ET (06:47 GMT)

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