Glass Lewis, a company that provides proxy-voting recommendations to institutional investors, said late Tuesday that it is now recommending that shareholders of Tesla (NASDAQ:TSLA) vote in favor of reelecting Robyn Denholm to chair the company's board of directors.
The company had previously opposed Denholm's reelection over concerns about so-called D&O insurance, which insures a company's directors and officers against liability claims. CEO Elon Musk had said earlier this year that Tesla would no longer pay for D&O insurance; instead, he said, he would personally insure the company's directors.
"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 opinion opposing Denholm's reelection.
The advisor said that it changed its recommendation to favor Denholm's reelection after Tesla's board voted to replace its earlier D&O policy with a 90-day interim coverage plan while it evaluated more-traditional insurance options.
Tesla's current position is still "unorthodox," with potential for conflicts of interest, Glass Lewis said, but it shows that Tesla's board is willing to take action in response to investor concerns.
The news was first reported by Reuters.
Denholm, a former telecom executive, has served on Tesla's board of directors since 2014. She was elevated to chair the board in late 2018, in response to pressure for increased oversight of Musk from regulators and investors.