Investors Call for Implementation of 40-Hour Work Week and Selection of Elon Musk's Successor at Tesla
Tesla Shareholders Urge Elon Musk to Focus on Car Company, Set Succession Plan
A group of major Tesla investors has expressed concerns about the electric vehicle manufacturer's leadership, prompting them to send a letter to the board of directors. The shareholders, including the American Federation of Teachers and the New York City Comptroller, collectively own approximately 7.9 million Tesla shares, which equates to around €2.5 billion based on Thursday's stock price.
In the letter, signed on Wednesday, the investors argue that Tesla is facing numerous challenges, such as the volatility of its stock price, declining global vehicle sales, employee treatment issues, and a deteriorating global reputation. They also note that Elon Musk's responsibilities outside Tesla, including his role as architect of the US Department of Government Efficiency, may impact the carmaker's operations.
Specifically, the investors have made four requests of the board:
- Elon Musk's Work Dedication: They encourage Musk to commit to working at least 40 hours a week at Tesla as part of a new compensation plan. The board needs to ensure that Musk dedicates enough time to the company to address key issues.
- CEO Succession Plan: The investors believe the current disclosure on the CEO succession plan does not provide shareholders with the required confidence. The board should be adequately prepared to appoint a suitable replacement if needed.
- Time Restraints for Board Members: Each executive board member at Tesla should be limited to one other board position and one executive position at another company.
- Independent Directors: The group requests that Tesla's board add at least one truly independent director who has no connections to other members.
The investors voice their worries that the board's delay in addressing these issues may have already caused long-term damage to Tesla's reputation. Since its all-time high in 2024, Tesla's stock has decreased by more than 50%, only to recover 64% from its April low following Musk's commitment to stepping away from politics.
Elon Musk recently stated on his social media platform that he would return to working 24/7 at Tesla, with a focus on critical technologies and upcoming projects such as Starship launch next week. This seemingly indicates his renewed commitment to the electric vehicle company amidst shareholders' calls for increased dedication.
What are Tesla's shareholders suggesting regarding Elon Musk's involvement in finance, business, and technology? They are requesting that he dedicates at least 40 hours a week to Tesla, sets a clear succession plan, limits board members' roles in other companies, and adds an independent director. Their concerns stem from the impact of Musk's outside responsibilities and the company's current challenges, such as volatility in stock price and declining global vehicle sales.
