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Will Elon Musk start filling out a time sheet? The world’s richest man is under pressure to act more like a regular chief executive at his electric-car maker, Tesla. He is even making some gestures in that direction. Expectations of a normal CEO schedule should be modest at best.
Musk on Wednesday called time on his role at the so-called Department of Government Efficiency. He has plenty of other things to occupy his days and nights. There is the social network X and its new AI division, xAI. Add to that rocket maker SpaceX and brain-mapping company Neuralink.
With such a packed diary, some Tesla investors wonder where they fit in. On Wednesday, shareholders including New York City pension funds sent a letter to the Tesla board demanding, among other changes, that Musk commit to at least 40 hours a week at the carmaker. They collectively only own about 0.2 per cent of Tesla stock, but their agitation could bring others on side.
Musk has been the quintessential superstar chief executive: irascible and an undeniable value creator. But the long leash shareholders afforded him may now have less slack. Tesla shares, even after a recent rally, are down nearly a fifth since December. Deliveries fell 13 per cent in the first quarter, year on year.
For shareholders, responsibility sits with Tesla’s board which might finally be taking the task seriously. The directors have formed an independent committee to consider a new compensation plan for Musk. It will have to be big to motivate the mercurial mastermind; he already has a $150bn stake in the company.
The trouble is that shareholders have mostly supported Tesla’s deviations from the governance norm. Last year, they voted by a strong majority to back a $56bn pay deal a judge had deemed improperly awarded. They also approved moving the company’s domicile to Texas, a jurisdiction that has since restricted shareholder rights.
Some of the dissidents’ proposals are achievable without cramping Musk’s style, such as the creation of a succession plan and the addition of a truly independent board member. Many current Tesla directors have personal or professional ties to Musk. The company recently settled a lawsuit for hundreds of millions of dollars over allegations directors were overpaid.
Musk’s pledge to refocus on his entrepreneurial empire may suffice. Being obsessed with Tesla in 2018 when production was ramping up proved to be a game-changer. That success made Musk richer and more influential than ever — though it also left him “fraying” and sleep deprived.
But Tesla is an anomaly, and for many investors that’s the point. Any other company with a shaky business and distracted chief executive would have faced an activist campaign to replace or add board members long ago. It’s up to Musk to decide whether he wishes to grind like before. It’s up to shareholders whether, that being the case, they’re happy being passengers.