Pension Funds Have Had It With Tesla’s Board And Musk

Key Concepts:

• Tesla board governance
• Elon Musk's leadership and extracurricular activities
• Pension fund concerns and shareholder activism
• Brand reputation and public perception
• Fiduciary responsibility
• Robo taxi program
• Tesla stock performance

Pension Funds' Concerns Regarding Tesla's Board and Elon Musk

• Main Point: Pension funds, including those representing unions like the American Federation of Teachers (AFT), are increasingly critical of Tesla's board for its oversight of Elon Musk and his various activities.
• Specific Details: AFT, representing 1.8 million members with $4 trillion in assets under management, including $8.8 billion in Tesla shares, is leading the charge.
• Quote: AFT President Randy Weingarten stated, "People don't like Elon Musk we've taken the position over the course of the last few months of do your job board do your job financial industry do the job you're supposed to do which is the governance of Tesla."
• Fiduciary Duty: Weingarten and the teachers union are urging fiduciary officers overseeing major state and city pension funds, as well as investment firms like BlackRock, Fidelity, Vanguard, T. Rowe Price, and TIAA, to review their Tesla holdings and pressure the board to improve governance.
• Risk Mitigation: The concern is that Musk's "extracurricular activities" and perceived neglect of his CEO duties could harm Tesla's performance, impacting retirees' portfolios.
• Quote: Weingarten emphasized, "We don't want Tesla to fail because if Tesla fails that means a lot of retirees are going to lose a lot of money in terms of their portfolios." She added, "If you're going to have Musk there then make sure he's there don't have him do these extracurricular activities make sure he's there or get another CEO."

State Treasurers' Concerns and Actions

• Main Point: State treasurers and comptrollers are also voicing concerns about the risks to their economies if Tesla falters due to poor board governance.
• Specific Details: Nine state treasurers and comptrollers sent a letter to Tesla Chair Robin Denholm in April.
• Quote: Illinois Treasurer Michael Ferris questioned, "No other publicly traded company CEO would have been allowed to neglect his day-to-day duties like Musk has no exception and if they had undertaken personal activities that hurt the reputation of a company or brand that badly would they be treated like he has been?"

Kalpers' Position

• Main Point: CalPERS, the largest US pension fund, has not yet commented on whether it will join the pressure on Tesla's board.
• Specific Details: CalPERS held approximately $9.4 million Tesla shares as of last year, a stake worth $3.2 billion as of June 3rd.

Impact of Musk's Activities on Tesla's Brand

• Main Point: Musk's involvement with the Trump administration, particularly his role in the federal job slashing Doge initiative, negatively impacted Tesla's brand.
• Specific Details: This involvement led to protests at Tesla stores and vandalism of its vehicles and facilities.
• Data: A poll by GBAO found that 55% of 2,000 Americans surveyed viewed Musk unfavorably. Tesla was the least favored brand among poll participants considering an electric vehicle.
• Data: 51% of survey respondents said they'd view Tesla more favorably if Musk were replaced as CEO.

Musk's Response and Tesla's Stock Performance

• Main Point: Musk has stated he's stepped back from his Doge duties, and Tesla's stock has rallied.
• Specific Details: Tesla's stock has jumped more than 50% since April 21st.
• Reason: Investors are hopeful that Musk will be more engaged in leading the company, especially with the upcoming pilot robo taxi program in Austin.

Skepticism Regarding Musk's Stepping Back

• Main Point: Some, like GBAO principal Margie Omero, are skeptical that Musk's latest moves will significantly change public perception.
• Quote: Omero stated, "He may say he's stepping away but his involvement with Trump both in helping to elect him and in helping enact Trump's wishes in government all those things are not going to change they're not over."

Synthesis/Conclusion:

The video highlights the growing concerns among major Tesla shareholders, particularly pension funds and state treasurers, regarding Elon Musk's leadership and the Tesla board's oversight. Musk's extracurricular activities and political involvement have negatively impacted Tesla's brand and raised questions about his commitment to his CEO duties. While Musk's recent stepping back from some activities and the subsequent rally in Tesla's stock offer some hope, skepticism remains about whether these changes will be enough to address the underlying governance issues and restore public confidence in the long term. The pressure on the Tesla board to improve its management of Musk is likely to continue.