As the CEO of SpaceX, Tesla, and now Twitter, Elon Musk has a lot on his plate. The billionaire confessed in February that the toll of working up to "probably 120” hours a week in order to manage his companies has been intense, saying he “wouldn’t wish that pain on anyone.”
But now, 17 major Tesla investors who together hold more than $1.5 billion of the electric vehicle giant—including one of Europe’s largest asset managers, Nordea Asset Management; the New York City Comptroller's office; and the Danish pension fund PensionDanmark—have had enough of Musk’s marathon schedule and want the board of directors to do something about it.
“We are concerned that the Board of Directors is failing to adequately represent the interests of Tesla’s shareholders,” the group wrote in an open letter on April 21, arguing Musk is “overcommitted at a time when the company faces critical challenges, including increased competition, regulatory scrutiny, and a stock slide.”
Tesla does not have a press office, and outreach to the company requesting comment was not immediately returned.
The shareholders requested a meeting with Tesla’s board to discuss their concerns and possible remedies next month, saying they need to ensure Musk is giving “adequate time and attention to the company.” And they even proposed a policy that would limit Musk’s commitments outside of Tesla which included a “CEO succession plan” if their attempts to rein in the billionaire aren’t successful. “Corporate boards can and should intervene if a chief executive appears to be distracted or overly focused on other ventures,” they wrote.
The shareholders’ concerns went well beyond Musk’s other jobs, however. The group argued that the CEO and Tesla’s board have also enabled a “toxic work culture,” pointing to a series of lawsuits that have been filed against the company since 2021 including “at least eight” sexual harassment lawsuits, and multiple suits alledging a “hostile work environment,” unsafe working conditions, and wage theft.
Tesla’s board and Musk have also ignored serious human rights issues, according to the shareholder group which highlighted the sourcing of cobalt from the Congo where child labor issues have been repeatedly documented.
“Despite Tesla’s claims that it prohibits its suppliers from using child labor, it continues to source cobalt from the Democratic Republic of the Congo, where child labor is pervasive,” they wrote, noting that a February 2023 report by NYU and the Geneva School for Economics and Management found that it is “virtually impossible” to know if cobalt is coming from smaller mines where child labor is used or regulated industrial facilities.
The shareholders warned that there is now “increased public attention on child labor and forced labor in supply chains” which could lead to serious regulatory and reputational issues for Tesla, calling it a “significant material risk” for the stock.
“The Board’s meager oversight of CEO Elon Musk and other critical aspects of corporate strategy, including the company’s approach to human rights and labor rights, exposes the company to substantial legal, operational, and reputational risks, thereby jeopardizing its long-term value,” they concluded.
