Tesla shareholders beg for Elon Musk to focus on the company, asking the CEO to work at least 40 hours a week
As Elon Musk prepares to leave the U.S. government, Tesla investors are pleading with the EV maker to make sure the CEO refocuses on the company and to disclose how the board would replace him in an emergency or if he loses interest. In a letter sent to Tesla board chair Robyn Denholm on Wednesday, shareholders demanded Musk work at least 40 hours a week at the company.
Elon Musk's departure from the Department of Government Efficiency has done little to quell the grievances of Tesla investors regarding the CEO's absence from the EV maker.
Musk said Wednesday he would leave the government following the end of his 'scheduled time' as a special government employee. The move comes amid renewed pleas from Tesla's investors for Musk to refocus on his role as chief executive and for the company to give investors more information about how it will eventually replace Musk when he moves on from Tesla.
'DOGE is just one of many outside time commitments that Musk has been sort of prioritizing over Tesla, Tejal Patel, executive director of SOC Investment Group, told Fortune. 'Just because he's leaving DOGE doesn't mean he's focusing on Tesla.'
SOC Investment Group, part of trade union coalition the Strategic Organizing Center, worked with a group of pension funds to send a letter to Tesla board chair Robyn Denholm on Wednesday, demanding the board address the ongoing 'crisis' at the company. The letter's 12 signees are long term investors who own or oversee investments of approximately 7.9 million of Tesla's 3.2 billion shares.
'Mr. Musk's outside endeavors appear to have diverted his time and attention from actively managing Tesla's operations, as any other chief executive officer of a publicly traded company would be expected to do,' the letter said. 'For many years, the amount of time CEO Musk has devoted to managing Tesla has been constrained because of his multiple privately held companies and other outside endeavors.'
Since Musk joined President Donald Trump's administration, Tesla stock is down more than 14% as vehicle registrations plummet due to increased Chinese competition and souring consumer opinion of the company over Musk. His contentious group DOGE has upended U.S. bureaucracy and cost 260,000 federal workers their jobs, Reuters calculated.
Illinois State Treasurer Michael Frerichs, one of the letter's signees, told Fortune Musk had gotten himself into even more political hot water after he criticized Trump's spending bill.
'It's impressive that he angered about half the U.S. by cozying up to Trump, and now he's picking a fight with Trump over his awful, ugly bill, and is likely angering the other half of the country,' Frerichs said.
The Tesla investors demanded the board include a time requirement as it assesses Musk's compensation, such as requiring him to work in his role at the EV company for at least 40 hours a week. The Tesla board has assembled a special committee to explore a new compensation deal for Musk, the Financial Times reported earlier this month. The CEO has been embroiled in a yearslong legal battle for a record-setting $56 billion pay package that has been rescinded by a judge.
The signees also called for a clear succession plan at the company, including identifying 'emergency' successors to step in for Musk should the company need it. Shareholders also asked the Tesla board to set more stringent limitations on directors' and executives' involvement in other companies and boards.
'We just want to make sure that individuals are able to actually dedicate enough time to oversee and, in the case of executives, to manage the company appropriately,' Patel said.
Shareholders urged Tesla to appoint at least one director who is 'truly independent' from the company, according to the letter. Earlier this month Chipotle chief strategy officer Jack Hartung joined Tesla's board, but disclosures noted his son-in-law is a current Tesla employee.
'It's a little surprising to us that the board would nominate another director who's considered non-independent under governance best practice standards, especially given the fact that their board has frequently been cited for having a lack of independence and deep connections to the CEO,' Patel said.
Tesla's board also includes Ira Ehrenpreis, chair of Tesla's compensation committee and longtime friend of Musk, as well as Musk's brother Kimbal Musk, who has sat on the company's board since 2004. The two insiders recently exercised stock options that yielded $162 million and $31 million respectively, according to SEC filings.
Tesla did not respond to Fortune's request for comment.
As Musk prepares to step away from his role at DOGE, investors are adamant that the CEO has a long way to go in righting the EV maker's course.
'In essence, it is a good first step,' said Frerichs. 'But the question is, is he just freeing up time, or has he learned lessons from his time? Everyone makes mistakes. The question for me is, do you learn from them?'
Musk reaffirmed his desire to lead Tesla earlier this month at the Qatar Economic Forum in Doha, saying in a video call he planned to be CEO of the company for another five years. All the while, Musk continues to be involved in leading SpaceX, X, and xAI. Investors will need to see Musk invest time in Tesla over the next six months to a year, Frerichs said.
'Does he still have interest in this company, or is he more interested in blowing up rockets? Is he more interested in going on rants on [X]?' he said.
Beyond finding the time and interest in his EV maker, Musk will have to correct what Wedbush Securities managing director Dan Ives previously called a 'brand tornado crisis moment.' Tesla's brand is inextricable from Musk, and Musk's involvement in U.S. politics can therefore alienate large swaths of potential consumers.
This story was originally featured on Fortune.com
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