ISS sides against two Tesla directors, backs split of Musk's roles

BOSTON (Reuters) - Proxy adviser Institutional Shareholder Services (ISS) recommended on Friday that investors vote against Tesla Inc (TSLA.O) directors Antonio Gracias and James Murdoch, increasing pressure on the car maker over their roles on its board.

FILE PHOTO: A Tesla charging station is seen in Salt Lake City, Utah, U.S. on September 28, 2017. REUTERS/Lucy Nicholson/File Photo

ISS also backed two shareholder proposals to be voted on at the company’s annual meeting set for June 5, including one that would require it to separate the current chairman and CEO roles of founder Elon Musk.

“The complexity of large-scale manufacturing and the challenges of successfully commercializing new technologies and new manufacturing and marketing techniques suggest that shareholders would be better served by having Musk focus on running the company, and allowing an independent director to run the board,” according to a copy of ISS’ recommendations seen by Reuters.

The recommendations by the top proxy adviser echo those made earlier this week by rival Glass Lewis, although ISS did side with Tesla and recommend investors vote for Musk’s brother and current director Kimbal Musk.

Union-affiliated activist CtW Investment Group has criticized the three Tesla directors up for election this year as being too close to Elon Musk or unqualified.

In its report, ISS wrote that Gracias, CEO of Valor Management Corp, is not sufficiently independent for key board committees. It also cited concerns regarding the lack of performance-based elements in Tesla’s pay plan in recommending the vote against Gracias, a compensation committee member.

ISS wrote that Murdoch is “overboarded” since he serves as the CEO of Twenty-First Century Fox Inc (FOXA.O) and on other boards.

A Tesla director not up for election this year because of the board’s staggered election schedule is Steve Jurvetson. He has been on leave from Tesla’s board since November when he also resigned from venture capital firm Draper Fisher Jurvetson (DFJ) amid an internal DFJ probe into sexual harassment allegations made against him, which he denied.

ISS wrote Tesla’s proxy notes Jurvetson’s leave but not the background, and said that Tesla “shareholders should expect a greater degree of transparency from the company as to the reason he remains on leave” and about his future status.

Reporting by Ross Kerber; Editing by Muralikumar Anantharaman

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Facebook backs U.S. regulation of internet political ads

SAN FRANCISCO/WASHINGTON (Reuters) - Facebook Inc Chief Executive Mark Zuckerberg on Friday endorsed U.S. legislation to regulate political ads across the internet, a concession to lawmakers days before he is scheduled to testify in two U.S. congressional hearings.

FILE PHOTO: Facebook Founder and CEO Mark Zuckerberg speaks on stage during the annual Facebook F8 developers conference in San Jose, California, U.S., April 18, 2017. REUTERS/Stephen Lam/File Photo

Zuckerberg also said Facebook would begin requiring people who want to run ads on the social network addressing political issues to verify their identity and location. That expands an earlier plan to require such verification for ads directly about elections.

“Election interference is a problem that’s bigger than any one platform, and that’s why we support the Honest Ads Act,” Zuckerberg wrote in a Facebook post on Friday.

That legislation was introduced last October to counter concerns about foreign nationals using social media to influence American politics, an issue being looked at as part of an investigation into possible Russian meddling during the 2016 U.S. presidential campaign.

Facebook disclosed in September that Russians under fake names had used the social network to try to influence U.S. voters in the months before and after the 2016 election, writing about inflammatory subjects, setting up events and buying ads.

In February, U.S. Special Counsel Robert Mueller charged 13 Russians and three Russian companies with interfering in the election by sowing discord on social media.

The legislation would expand existing election law covering television and radio outlets to apply to paid internet and digital advertisements on platforms like Facebook, Twitter Inc and Alphabet Inc’s Google.

Facebook had previously stopped short of backing the legislation, saying it wanted to work with lawmakers further and announcing attempts at self-regulation.

Zuckerberg is scheduled to appear on Tuesday before a joint hearing of two U.S. Senate committees, and on Wednesday before a U.S. House committee.

Under the Honest Ads Act, digital platforms with at least 50 million monthly views would need to maintain a public file of all electioneering communications purchased by anyone spending more than $ 500.

Zuckerberg said on Friday that he also wanted to shed more light on “issue ads,” or ads that discuss a political subject but do not directly relate to an election or a candidacy.

Issue ads are frequently run by interest groups, lobbying organizations and wealthy individuals who want to influence legislation or have an indirect impact on an election.

Every advertiser who wants to run an issue ad will need to confirm their identity and location, Zuckerberg wrote.

Reporting by David Ingram in San Francisco and Dustin Volz in Washington; Editing by Bill Rigby

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