FYI: Europe’s largest pension fund, Stichting Pensioenfonds ABP, has divested its Tesla holdings, totaling $585 million, due to concerns over CEO Elon Musk’s controversial $56 billion compensation plan.
Pension Fund Sells Tesla Stake Over Pay Package Concerns
In a striking move, Europe’s largest pension fund, Stichting Pensioenfonds ABP, recently liquidated its entire investment in Tesla, worth an estimated $585 million. This decision was driven primarily by objections to Tesla CEO Elon Musk’s massive $56 billion compensation deal. According to a spokesperson for the fund, Musk’s compensation package presented significant issues, as highlighted by Bloomberg.
Judicial Rulings and Shareholder Votes
The controversial pay package, which has faced intense scrutiny, was twice approved by Tesla shareholders—first in 2018 and again last year. Despite this, Delaware Chancery Court Judge Kathaleen McCormick ruled the package unreasonable and invalidated it shortly following both votes. The ongoing court ruling has left Musk’s compensation package in a state of uncertainty, as Tesla plans to appeal the decision.
Additional Reasons for the Divestment
Reports originally published in the Dutch newspaper Het Financieele Dagblad also pointed to Tesla’s working conditions as a reason for the fund’s decision to pull its investment. This underscores a broader concern with the company’s operational practices beyond Musk’s controversial pay.
Expert Predictions and Future Implications
The timing of the divestment is noteworthy, coming soon after Judge McCormick’s repeated decisions against the pay package. Industry experts like Dan Ives of Wedbush have speculated that Tesla will pursue the matter through multiple levels of the judiciary, possibly reaching the Federal system. Ives speculated that this ongoing legal battle may influence other companies to reconsider their incorporation status in Delaware, a state known for its corporate-friendly laws.
Conclusion
While the final outcome of Musk’s potential pay package remains unclear, the concerns raised by significant stakeholders like Stichting Pensioenfonds ABP could have far-reaching implications for Tesla and beyond. The controversy may prompt public companies to reevaluate how compensation packages align with both shareholder votes and ethical standards.
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By William Kouch, Editor of Automotive.fyi
