Investors Pressuring Elon Musk to Focus More on CEO Responsibilities at Tesla
A coalition of Tesla investors has urged CEO Elon Musk to dedicate a minimum of 40 hours per week to the electric vehicle company, citing the need for his undivided attention to tackle faltering sales and stock volatility. In a letter obtained by CNN on Wednesday, the shareholders — who collectively hold approximately 7.9 million shares of Tesla — argued that Musk's attention has been diverted due to his involvement in other ventures.
The letter emphasizes that Musk's management of Tesla's operations has been compromised, as any other CEO of a publicly-traded company would be expected to fulfill this role. Tesla has yet to respond to a request for comment.
The investors accused the Tesla board of being uninterested in acting in the best interest of all shareholders by demanding Musk's full-time commitment to the company. Since Musk assumed the role of CEO in 2008, he has been known for his hands-on approach, often sleeping on factory floors and working around the clock during difficult times for the company.
However, in recent years, Musk's attention has been divided among several other companies, such as SpaceX, X (formerly Twitter), xAI, and his brain chip company, Neuralink. Musk has also been involved with the Department of Government Efficiency (DOGE) since President Donald Trump's inauguration, tasked with modernizing and finding cost savings in the federal government.
Despite Musk's public commitment to focus on Tesla, concerns remain due to the company's dwindling sales, falling profits, and stock volatility. Additionally, the company's brand reputation has suffered in the context of Musk's growing political profile.
The investors suggested several concrete steps to reverse Tesla's troubles, including tying Musk's pay to a full-time commitment at Tesla, disclosing a clear CEO succession plan, and adding an independent board member to the company's board. The letter emphasized the importance of a CEO whose time and attention align with the scale of the responsibilities at hand.
In terms of governance reforms, the investors proposed establishing clear expectations and metrics for Musk's time commitment and performance, limiting his outside business commitments, and adding independent board members without ties to existing members. The board was also urged to mandate a minimum workweek for Musk and hold him accountable for adhering to this commitment.
The investors called for regular progress meetings to monitor and adjust these goals as necessary, preparedness for future leadership changes through a formal succession plan, and increased transparency and communication with shareholders and stakeholders. By implementing these measures, the investors believe Tesla's board can effectively address shareholder concerns, ensure a more focused leadership, and guide the company towards recovery and growth.
The investors contend that Musk's leadership at Tesla, a publicly-traded company, necessitates a full-time commitment, given his involvement in other domains such as finance (SpaceX, X, xAI, Neuralink) and politics (Department of Government Efficiency). They propose enforcing a minimum workweek for Musk, tying his pay to this commitment, and disclosing a succession plan to ensure a focused leadership and foster recovery and growth for the company.
