In the wake of a difficult phase at Tesla Inc. TSLA, a group of leading pension funds is urging CEO Elon Musk to commit at least 40 hours a week to the automaker.
What Happened: A group of major pension funds, managing approximately $950 billion in assets, has sent a letter to Tesla’s chair, Robyn Denholm, urging for corporate governance reforms to address the current turmoil at the electric vehicle manufacturer, reported the Financial Times.
The letter, signed by 12 long-term institutional investors, which include the New York City Comptroller and the American Federation of Teachers, highlights the need for Musk’s full-time commitment to Tesla. This demand is seen as a significant escalation in the investors’ efforts to bring about change at the company.
The letter states, “The current crisis at Tesla puts into sharp focus the long-term problems at the company stemming from the CEO's absence, which is amplified by a Board that appears largely uninterested and unwilling to act in the best interest of all Tesla shareholders by demanding Musk's full-time attention on Tesla.”
The letter further urged Tesla’s board to create a succession plan for top executives and appoint a new director who is “truly independent…with no personal ties to other board members”.
The pension funds also proposed that Musk’s new compensation plan should require him to dedicate at least 40 hours a week to Tesla. They worry that his leadership roles at four private companies and his foundation could distract him from his responsibilities at Tesla.
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Why It Matters: Despite holding only 0.25% of Tesla’s shares, the investors’ move underscores the impact of Musk’s controversial political stance on the company. In May, reports surfaced that Tesla’s board had considered replacing Musk as CEO due to significant financial setbacks. However, Musk and Chair Robyn Denholm denied these claims.
The pension funds’ demand for Musk’s full-time commitment to Tesla underscores the crucial role he plays in the company’s success and stability. Last week, Musk wrote on X, "Back to spending 24/7 at work and sleeping in conference/server/factory rooms. I must be super focused on X/xAI and Tesla . . . as we have critical technologies rolling out." However, he did not mention the exact amount of time he plans to dedicate to Tesla.
On Wednesday, Musk announced the end of his role as Special Government Employee leading the Department of Government Efficiency (DOGE), sparking a 2.9% increase in Tesla’s stock in overnight trading. This move was seen as a positive sign of Musk’s renewed focus on Tesla’s operations. Despite a recent surge, Tesla’s shares remain 26.5% below their December peak.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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