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

When Elon Musk appeared in the White House last week at a ceremony with President Donald Trump marking the end of his controversial role leading the federal job-slashing DOGE initiative, he sported a shiner on his right eye that he claimed came from toddler son X. That literal black eye will heal, but the figurative ones Tesla and Musk’s reputation have received from his political activities are likely to linger.

Some of Tesla’s biggest shareholders — including unions like the American Federation of Teachers, whose 1.8 million members participate in pension funds with $4 trillion of assets under management, including $8.8 billion of Tesla shares — see one group as largely to blame: the EV company’s board.

“People don't like Elon Musk,” AFT President Randi Weingarten told Forbes. “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.’”

“Make sure he’s there or get another CEO”

Randi Weingarten

Weingarten and the teacher’s union have been pushing 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 change its ways.

“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,” Weingarten said. 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.”

Nine state treasurers and comptrollers sent a letter to Tesla Chair Robyn Denholm in April raising concerns about risks to their economies if the company falters because of poor board governance. “No other publicly traded company CEO would've been allowed to neglect his day-to-day duties like Musk has. No exception,” said Illinois Treasurer Michael Frerichs, who signed the letter. “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?”

CalPERS, the largest U.S. pension fund representing public workers in California, had no specific comment on Tesla and said its investments are “are index-oriented and optimized using systematic and quantitative investment strategies, not driven by any single period’s events.” However, it sold 4.5 million Tesla shares in the third quarter of 2024. The fund held about 9.4 million Tesla shares as of its last annual filing, a stake worth $3.2 billion as of June 3.

Tesla fell 2.9% to $332.05 on Wednesday. The shares are down about 18% this year.

Musk for years has divided his time as Tesla chief with leadership roles at SpaceX, X, The Boring Co., Neuralink and xAI, but his Trump administration job proved particularly harmful to the brand, spurring protests at Tesla stores and vandalism of its vehicles and facilities. A poll conducted by Washington-based GBAO last month found that Musk was viewed unfavorably by 55% of the 2,000 Americans it surveyed, while Tesla ranked as the least favored brand among poll participants who have or are considering getting an electric vehicle. Most importantly, 51% of survey respondents said they’d view Tesla more favorably if the world’s wealthiest human were replaced as CEO.

“If you look at what’s happened to views toward Musk and the brand among people who are the target, it seems irreversible. His numbers are atrocious.”

Margie Omero

Musk has now said he’s stepped back from his DOGE duties and Tesla stock has rallied in the past few weeks, jumping more than 50% since April 21, as many investors appear hopeful he’ll be more engaged in leading the company, particularly as it prepares to launch a pilot robotaxi program in Austin this month. He’s even shown signs of breaking with Trump, labeling the the president’s so-called Big Beautiful budget bill a “disgusting abomination” on Tuesday because of how much it increases the federal deficit.

GBAO Principal Margie Omero, who oversaw the Musk-Tesla survey, isn’t sure the billionaire’s latest moves will make a difference.

“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,” she said. Pollster GBAO focuses mainly on progressive issues and notes that Tesla’s core customer base and EV buyers generally tend to identify as Democrats. “If you look at what’s happened to views toward Musk and the brand among people who are the target, it seems irreversible. His numbers are atrocious.”

“Tesla's brand has suffered dramatically alongside Elon Musk's brand–in some ways they’re one and the same,” said Maryland Comptroller Brooke Lierman, also a signatory to the April letter to board chair Denholm. Maryland’s State Retirement Agency currently has about $175 million invested in Tesla through pooled accounts.

“As somebody who keeps an eye on the returns of our retirement portfolio and our investments, I am always looking to make sure that our retirees and their hard-earned retirement dollars are invested wisely–and with companies governed by boards we can trust and who are engaged in responsible business practices,” Lierman said.

Musk’s behavior and unrestrained comments on social issues have persisted for years, from his false claim in 2018 that he’d lined up funding to take Tesla private. The same year he called a critic “pedo guy” and had to go to court to defend his comments in a defamation trial because of it. During a 2020 earnings call meltdown, he decried emergency public health rules at the start of the COVID-19 pandemic as “fascist.” More recently, he gave what looked like a Nazi-style salute at a Trump victory rally, and in February wildly waved a chainsaw around onstage at a conservative political conference. Recent and detailed reports of his use of drugs including ketamine and Adderall haven’t helped.

Denholm didn’t respond to a request for comment. Weingarten, Frerichs and Lierman said they’ve had no response from Tesla’s board from their letters. Weingarten said AFT is weighing potential legal action against Tesla’s board, though hasn’t made a final decision on the matter.

Musk “has done huge damage to the Tesla brand and Tesla’s reputation,” she said. “If boards are not going to do their job, outside pension funds, including advocates of them, are going to try to force these boards to do their jobs.”

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