He’s appeared at a flashy Tesla Inc. product unveiling and a thunderous SpaceX launch while his boardroom chairs have sat empty. Now, Steve Jurvetson is surfacing as the central figure in the debate over governance at Elon Musk’s electric-car company.
The well-known Silicon Valley investor and friend of Musk’s has been on leave from Tesla’s board since resigning from DFJ, the venture capital firm he co-founded. The same day of his exit in November — precipitated by accusations of misconduct that he has denied — Tesla put Jurvetson on a leave of absence, “pending resolution of these allegations.”
More than six months later, little has changed and much remains unclear. Tesla won’t say if it’s commissioned or is doing its own investigation. DFJ, which conducted its own probe, declined to comment for this story, as did Jurvetson, 51.
Tesla’s handling of Jurvetson doesn’t sit well with CtW Investment Group. The activist firm affiliated with union pension funds pointed to the director’s leave as emblematic of poor leadership and weak corporate governance. Proxy adviser Glass Lewis agreed and cited the “fairly extraordinary length” of Jurvetson’s board absence in a report to clients this week. It sided with CtW by urging shareholders to vote against the three directors up for re-election at the company’s annual meeting next month.
“Six months is a highly unusual time to be on leave,” Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said in a phone interview. “As a director, you are supposed to be minding the store. You are there to serve shareholders. If you can’t fill the job, you resign. Jurvetson’s extended leave means that there is a gap on the board during a very important period.”
In November, Jurvetson said he was leaving DFJ “to focus on personal matters, including taking legal action against those whose false statements have defamed me.”
While on this indefinite break, Jurvetson hasn’t yet filed a defamation lawsuit in state or federal court, according to data compiled by Bloomberg Law. No complaints turned up in a separate search of county courts in Northern California.
Jurvetson does still seem to be in the fold with Musk, 46, and his companies. Four days after leaving DFJ, Jurvetson attended Tesla’s last big party — the debut of its Semi Truck and surprise reveal of the next-generation Roadster — at the company’s design studio near Los Angeles. He also attended Space Exploration Technologies Corp.’s maiden launch of its massive Falcon Heavy rocket in February. SpaceX also put Jurvetson on leave from its board in November.
In a letter to Tesla shareholders opposing the re-election of three directors, CtW criticized lead independent director Antonio Gracias, saying his failure to insist that Jurvetson resign rather than take a leave of absence has signaled “an extraordinary unwillingness to accept the need for change.”
Tesla’s annual shareholders meeting is set for June 5 in Mountain View, California. In its proxy statement, the company said that Jurvetson “possesses specific attributes that qualify him to serve as a member of our Board, including his experience in the venture capital industry and his years of business and leadership experience.”
Jurvetson, who has a master’s degree in electrical engineering from Stanford University and made an early bet on Hotmail before it was acquired by Microsoft Corp., has served on Tesla’s board since 2009, a year before the company went public. He holds more than 104,000 Tesla shares worth about US$29.6 million, according to data compiled by Bloomberg.
The venture capital firm originally known as Draper Fisher Jurvetson no longer has a stake in Tesla. It’s named new directors to the boards of several startups Jurvetson used to be on, including Memphis Meats, Mythic, Planet and Synthetic Genomics.
He remains on the board of D-Wave, although DFJ has the right to nominate its own representative. “Steve has been a fantastic board member, and he’s going to stay on the board of D-Wave as an independent director,” Chairman V. Paul Lee said in an interview.
Tesla’s board has long drawn flak for being comprised of several close confidants of Musk and the potential for this presenting conflicts of interest. Jurvetson shared an image on the photo-sharing service Flickr in January of a book of Musk quotes that used one of his portraits of Musk for its cover. He wrote that he had “a copy at each bed stand” and was “reading them as bedtime parables to the kiddos.”
Jurvetson’s friendship with Musk suggests it’s unlikely the Tesla CEO will get unbiased, objective advice from him, said Kabrina Chang, an associate professor at the Boston University Questrom School of Business, who studies corporate ethics and labour laws.
“The friendship is problematic even under the best of circumstances,” Chang said. “Because research has shown that confirmation bias is a thing, conflicts of interest are a thing. And dealing with the conflict of interest in the right way is really hard to do when your friend is the CEO.”