SAN FRANCISCO - Proxy advisory firm Institutional Shareholder Services (ISS) recommended on Monday Tesla Inc investors vote against the re-election of two of its board members, Ira Ehrenpreis and Kathleen Wilson-Thompson.

ISS cited concerns about "the board's risk oversight in light of the pledging (as collateral) of a significant amount of the company's stock by certain directors" as one of the reasons for the recommendation.

Ehrenpreis and Wilson-Thompson are both members of the Nominating and Corporate Governance committee at Tesla's management.

Big institutional investors usually take their cues on voting on company matters from proxy advisers' recommendations.

Pledging of company stock by directors or executive officers can pose a risk to the investments of outside shareholders, ISS said, adding that directors and executives with a pledged position may be forced to sell company stock, for example, to meet a margin call.

As of March 31, CEO Elon Musk, director Kimbal Musk, and director Ira Ehrenpreis had pledged a portion of their share ownership, ISS said.

The proxy adviser said that the aggregate number of pledged shares increased from 88.93 million, valued at $62.756 billion based on the previous fiscal year-end share price, to 89.74 million, valued at $94.835 billion.

"This reflects an increase in the number of shares pledged by Elon Musk, from 88.33 million to 89.18 million, a slight decrease in Kimbal Musk's pledging from 599,740 shares to 511,240 shares, and a new pledge of 41,635 shares by Ira Ehrenpreis," ISS said.

ISS also urged Tesla investors to vote for a shareholder proposal regarding the right of employees to form a labor union.

Tesla's annual meeting of stockholders is scheduled to be held on Aug. 4.

(Reporting by Hyunjoo Jin and Shivam Patel; Editing by Christopher Cushing and Editing by Muralikumar Anantharaman)