Tesla has bore witness to a tough couple of months, with falling stock prices and a sharp drop in the sales of its cars. Investors have begun pushing for more involvement from the CEO, with a group of pension fund investors in the company now demanding Musk work a 40-hour workweek to bring order back to the company. Investors want Musk to take accountability for Tesla’s falling reputation and bring stability back to the organization, but the CEO appears reluctant to comply.
The investors want Musk to work 40 hours per week at the organization and want the terms to be stated in any future compensation plans negotiated with him. Elon Musk stands at the helm of many different businesses, so it can be understandably difficult for him to commit to a full-time supervisory role at Tesla. However, there is something to consider from the investor perspective as well. Should CEOs be expected to work 40 hours in order to fully execute their roles? It does appear to be a fair demand as there can be considerable benefits to having leaders actively involved in running the companies that they agree to oversee.
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Will Musk Agree to a 40-Hour Workweek? It Does Appear Unlikely
Tesla has faced many challenges over the years, which is typical for any business operating at this scale, however, the recent dent to its reputation has been particularly alarming for employees and investors. After the majority of Cybertrucks were recalled earlier in the year due to an issue with loose parts, Musk’s current public image has further affected the company’s reputation in and outside the country.
The demand that Musk take up a 40-hour workweek is not irrational or unfounded, but for now, the CEO appears reluctant to agree.
What Do Tesla Shareholders Want From Musk?
Hoping to revive the company’s reputation and bring Tesla back on track to being a respected name in the industry, the group of pension fund leaders with approximately 7.9 million shares in Tesla have a few requests. According to CNBC, the investors sent a letter to the company’s board chair Robyn Denholm stating, “Tesla’s stock price volatility, declining sales, as well as disconcerting reports regarding the company’s human rights practices, and a plummeting global reputation are cause for serious concern.”
The letter also indicated that Musk’s external activities and controversial involvement with the government have been a key reason for the problems being faced by the EV maker. “Mr. Musk’s outside endeavors appear to have diverted his time and attention from actively managing Tesla’s operations, as any other chief executive officer of a publicly traded company would be expected to do,” the letter explained.
“Tesla deserves a CEO whose time and attention align with the scale of the responsibilities at hand—particularly in light of recent performance challenges, strategic uncertainties, and the company’s evolving competitive landscape. It is the Board’s fiduciary duty to structure compensation in a way that incentivizes meaningful, sustained engagement—not merely symbolic presence.”
From the letter, it is apparent that investors believe that the company does not currently enjoy the full attention of its leader and hopes for a more hands-on approach in the long run.
Investors Want Changes Not Just From Musk but the Board Overall
The investors also want Tesla to chart out a clear succession plan for the business to ensure that the future of the company is taken into consideration. A succession plan might sound preemptive as the current CEO has not indicated that he will ever step down, however, having a concrete plan in place can provide reassurance to those invested in the future of an organization.
The Tesla shareholders’ expectations from Musk aside, the group requests disclosure of the succession plan, the internal candidates’ development strategies and talent pipeline for this development, and the criteria for when an outside search firm might be engaged. The letter clearly hopes that Tesla will be able to show how it plans to handle an “emergency” departure if matters escalate to that point.
The investors also want a policy put in place that will limit the entire Tesla board of directors from making external commitments at public and private companies to “ ensure directors are not overcommitted.” The last expectation of accountability from the Tesla shareholders is the hiring of at least one “new truly independent director with no personal ties to other Board members.”
Musk Has Not Responded to Demands of 40 Hours of Work per Week
Thus far, Elon Musk has not publicly responded to the conversation about the 40-hour workweek. The CEO did respond to a tweet on Twitter/X however. The tweet was posted by a user with the handle I like Teslas stating, “It’s funny we have investors demanding Elon work a certain amount of hours per week when we haven’t even PAID HIM TO DO SO since 2018. You got to have some nerve.” The CEO replied with a brief “Indeed (sigh),” and has not otherwise commented on the letter.
The new compensation plan negotiated for Musk has not been finalized as yet and it will be up to the board of directors to determine whether to include the “Musk to work 40-hour workweeks” clause in the plan. The previous compensation plan, one of the largest performance-based plans to ever be granted to a CEO, was calculated to be worth $56 billion. Unfortunately for the billionaire, the plan was blocked by a judge in Delaware and has since been halted.
Should CEOs be Expected to Work 40 Hours?
The Tesla shareholders’ expectations of Musk are standard for what is expected of a CEO, but not all leaders work in the same way. Requiring Musk to work 40-hour workweeks may sound like an obvious solution to the CEO’s distraction from other activities, but it might be harder to enforce than one might think. The CEO has been largely credited for “creating” the Tesla brand despite buying out the existing company and is a big component of the overall brand himself. Musk is also known for being willful and he has other companies like Twitter/X and SpaceX to run.
Is there a benefit to CEOs working 40 hours a week? Indeed. There are many advantages to the practice of having employers work the same way employees are expected to. When CEOs make demands for in-person work and make statements suggesting that 40-hour workweeks are insufficient for employees to spend at their jobs, it can be a good idea for CEOs and other C-suite executives to model the behavior and set the standards for work. It makes their message more believable and shows that leaders are willing to walk the talk.
Having CEOs work regular hours also demonstrates the leader’s involvement and interest in the organization’s well-being and that of its associates, fostering greater confidence in their capabilities. In most scenarios, C-suite leaders are compensated far more than the average employee can ever hope to earn, which makes it doubly important for them to put in their fair share of time logged in during work hours.
The future of Musk’s 40-hour workweek remains uncertain but this could be the opportunity for Musk to take on more accountability at Tesla, and realign the company’s prospects once more. We’ll provide updates when we know more about how the situation evolves.
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