Investors worth more than $700 billion are ramping up calls for a Tesla board shakeup — one that goes far beyond what the SEC wants (TSLA)

• Tesla has until the end of November to add two independent directors to its board, as per a $40 million settlement with the Securities and Exchange Commission. 
• CtW Investment Group and elected officials from three states are urging the company to go above and beyond the legal requirements in order to protect investors. 
• Five of Tesla's eight directors currently have close ties to CEO Elon Musk, the letter says, despite meeting the legal requirements for independence. 

Tesla should go beyond the board changes required by its settlement with the US’ top stock market regulator, a group of investors and elected officials said in a letter to company directors Thursday.

CtW Investment Group and other signatories, which collectively represent some $774 billion worth of union pension investments, says that adding two more independent directors to the board is a start, as per Tesla's $40 million settlement with the Securities and Exchange Commission, but "does not by itself amount to a credible commitment to change the board’s composition."

It’s not the first time CtW has been involved in a spat over Tesla’s board of directors. Ahead of the company’s annual shareholders meeting in May, CtW said CEO Elon Musk’s brother Kimball Musk — as well as Antonio Gracias and James Murdoch — should be booted from the Board. In the end, however, their push fell short and all three were reelected.

This time, however, elected officials have joined CtW's call. New York State and New York City comptrollers and treasurers of Connecticut and Oregon have also cosigned the letter.

Read more: James Murdoch is the top candidate to replace Elon Musk as Tesla's chairman: report

"Given the lack of responsiveness to fundamental governance concerns, we believe that shareholders need new stewards on the board," the letter, addressed to directors Robyn Denholm, Linda Rica, and Murdoch, reads

The firm says it's concerned about the lack of a timeline for director departures, and wants to see the board draw from a diverse set of candidates, rather than the high number of insiders that currently sit on the board.

"While meeting the technical definition of independence, five of eight current non‐executive directors have professional or personal ties to Mr. Musk that, in light of recent events, appear to have put at risk their ability to exercise independent judgment," the letter reads.

Tesla has until November 30 to make the changes called for in its settlement with the SEC. The company did not respond to a request for comment. Murdoch is reportedly being considered by some members as the best possible replacement. 

"Given that shareholders have been calling for improvements to the board’s structure with little effect," CtW says, "more concrete steps are needed to demonstrate to shareholders that the company is taking these concerns seriously."

Last week, Tesla posted a surprise quarterly profit that sent the stock flying. The earnings beat came after an all-hands-on-deck push to get completed cars out the factory doors and delivered to customers, and a slew of executive departures that have reportedly left Elon Musk with an abnormally high number of direct reports.

The letter from CtW requests a response from Tesla by November 19.

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SEE ALSO: GM is 'far less risky' than Tesla, if you want to invest in the future of transportation

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