Tesla (TSLA) board members have acquired a wake-up name letter from eight state treasurers, asking them to satisfy their duties and supervise the corporate’s CEO, Elon Musk.
Will they ignore this warning as properly?
There have been considerations about Tesla’s board sleeping on the wheel for some time now.
Their job is to supervise Tesla’s administration for the good thing about shareholders, however Tesla’s inventory is down nearly 40% this yr whereas the CEO is splitting his time between 6 totally different firms and initiatives whereas alienating most of Tesla’s shopper base.
But, the board hasn’t mentioned a phrase about it.
The state of affairs lends weight to the argument that the board is totally below Musk’s management, which is the primary level of competition in Tesla’s $55 billion CEO compensation case.
Now, eight state treasurers have joined forces to boost their considerations with the board. They wrote in a letter addressed to Robyn Denholm, chair of Tesla’s board:
We’re more and more involved that Tesla’s current efficiency alerts deeper governance and management challenges that, if left unaddressed, may have critical penalties for the corporate and its stakeholders. Within the first quarter of 2025 alone, Tesla’s inventory declined by 36%. The corporate missed supply targets, recalled a considerable variety of autos, and skilled a surge in trade-ins for competing manufacturers. In the meantime, CEO Elon Musk continues to divide his consideration throughout a number of firms and a high-profile advisory function throughout the federal authorities. These exterior commitments elevate critical questions on whether or not Tesla’s management is absolutely engaged in addressing the corporate’s core challenges.
Within the letter, the treasurers remind Tesla’s board of its responsibility “to supply robust oversight, uphold fiduciary requirements, and be sure that the corporate’s management is aligned with the long-term finest pursuits of the corporate.”
They’re immediately asking the board three questions:
- How is the Board guaranteeing that Mr. Musk and Tesla’s management staff are devoting ample time and focus to resolving current efficiency points and guiding the corporate’s future course?
- In gentle of the corporate’s underperformance, how is the Board evaluating whether or not government compensation stays aligned with shareholder worth and company accountability?
- How does the Board plan to speak its technique for navigating this era of uncertainty and restoring investor and public confidence in Tesla’s management?
Tesla goes to launch its Q1 2025 monetary outcomes as we speak, maintain its earnings convention name, and have a “stay firm replace.’ Perhaps a few of these questions shall be answered.
Right here’s the letter in full:
2025-04-17 Letter to Tesla Board Chair
April 17, 2025
Robyn Denholm
Chair of the Board
Tesla, Inc.
1 Tesla Highway
Austin, TX 78725
Pricey Chair Denholm,
We’re entrusted with selling the long-term financial well being and monetary stability of our states and the folks we serve. Tesla, Inc. is not only one of many world’s most useful firms—it’s a main participant within the clear vitality economic system and a number one pressure in rising applied sciences resembling robotics and autonomous driving. The corporate’s success or setbacks have vital implications for employees, regional industries, and innovation ecosystems in our states.
We’re more and more involved that Tesla’s current efficiency alerts deeper governance and management challenges that, if left unaddressed, may have critical penalties for the corporate and its stakeholders. Within the first quarter of 2025 alone, Tesla’s inventory declined by 36%. The corporate missed supply targets, recalled a considerable variety of autos, and skilled a surge in trade-ins for competing manufacturers. In the meantime, CEO Elon Musk continues to divide his consideration throughout a number of firms and a high-profile advisory function throughout the federal authorities. These exterior commitments elevate critical questions on whether or not Tesla’s management is absolutely engaged in addressing the corporate’s core challenges.
We commonly work together with stakeholders throughout our states, together with institutional traders, trade leaders, employees, and small companies. We’re listening to growing concern about Tesla’s course, not solely from monetary professionals however from those that have appeared to Tesla as a pacesetter in clear vitality innovation and American industrial renewal. If Tesla falters, the results gained’t be confined to shareholders—they may ripple by way of regional economies, workforce pipelines, and public confidence within the vitality transition.
At a second when American industrial management is dealing with stiff international competitors, it’s important that firms like Tesla are ruled with focus, self-discipline, and readability of mission. The Board’s function is particularly important now—to supply robust oversight, uphold fiduciary requirements, and be sure that the corporate’s management is aligned with the long-term finest pursuits of the corporate. Public officers like us don’t take the step of elevating these considerations evenly besides when the plain dangers demand it.
We consider the Tesla Board has a accountability to behave decisively to make sure the corporate returns to a steady and targeted trajectory.
We respectfully request the Board present readability on the next:
- How is the Board guaranteeing that Mr. Musk and Tesla’s management staff are devoting ample time and focus to resolving current efficiency points and guiding the corporate’s future course?
- In gentle of the corporate’s underperformance, how is the Board evaluating whether or not government compensation stays aligned with shareholder worth and company accountability?
- How does the Board plan to speak its technique for navigating this era of uncertainty and restoring investor and public confidence in Tesla’s management?
Lastly, we strongly consider Tesla’s Board would profit from participating with public sector stakeholders who share an curiosity within the firm’s long-term worth and societal impression. We welcome the chance to talk additional about these considerations and focus on how the Board can take swift and clear motion to revive investor confidence and public belief in Tesla’s management and the corporate’s future.
We welcome a response and the chance for continued dialogue.
Signed,
Mike Pellicciotti, Washington State Treasurer
Deborah B. Goldberg, Massachusetts State Treasurer and Receiver-Normal
Michael W. Frerichs, Illinois State Treasurer
Erick Russell, Connecticut Treasurer
Laura M. Montoya, New Mexico State Treasurer
David L. Younger, Colorado State Treasurer
Mike Pieciak, Vermont State Treasurer
Malia M. Cohen, California State Controller
Electrek’s Take
Tesla is a $700 billion publicly traded firm that’s run like a household enterprise by Musk, who owns simply 13% of the float.
The board, which was so handsomely rewarded that it needed to return nearly $1 billion value of compensation as a part of a shareholder lawsuit, is letting Musk do no matter he desires with none objection.
It’s clear that they’ve a quid professional quo with Musk, whereby they obtain compensation at a fee a number of occasions increased than every other equally sized firm in alternate for permitting Musk to run Tesla as if it had been his personal firm.
Whereas I’m glad they despatched this letter, I doubt {that a} group of state treasurers will persuade Tesla’s board to do something.
At this level, they’re both utterly wonderful with Musk destroying Tesla or they consider his claims about self-driving know-how.
