Proxy advisory firm Glass Lewis said late Tuesday it had recommended Tesla Inc.’s investors to vote in favor of reelecting board chair Robyn Denholm after having earlier opposed her reelection in June.
Glass Lewis said its recommendation changed due to the satisfactory action taken by Tesla regarding liability insurance for its directors.
Tesla will hold its annual shareholder meeting on Sept. 22.
Glass Lewis said it changed its recommendation due to the move by Tesla’s board to replace its earlier liability insurance policy with a 90-day interim arrangement to resume evaluating more traditional options for liability insurance.
In June, Glass Lewis had joined Institutional Shareholder Services Inc. in opposing the chairwoman’s re-election to the board.
The recommendation was based on corporate governance concerns due to an insurance arrangement with CEO Elon Musk, after Tesla’s decision to not renew its liability policy for directors and officers over high premiums quoted by insurers.
“We are concerned that this D&O arrangement gives the company’s independent directors a direct, personal financial dependency upon the CEO they are tasked with overseeing,” Glass Lewis had said in its earlier recommendation.
On Tuesday, the proxy adviser said that while Glass Lewis still regarded the revised policy as “unorthodox and potentially conflicting”, it at least showed that Tesla responded to concerns from shareholders and related parties regarding the earlier policy.
“While we do not believe that recommending shareholder opposition to any director is warranted based solely on this issue at this time, we may recommend holding certain directors accountable should the company ultimately fail to commit to a less problematic D&O arrangement,” Glass Lewis said.
Denholm, a company director for nearly six years, was named Tesla chairwoman in November 2018 at a time when investors were demanding more robust oversight of Musk’s activities and public outbursts.