Tesla investors call for 'distracted' Elon Musk to be reined in as they worry he's 'overcommitted'

• Tesla investors called for Elon Musk to be reined in an open letter, citing the CEO's many commitments.
• The 17 investors want a CEO that "dedicates adequate time and attention to the company."

A group of Tesla investors is calling for Elon Musk to be reined in, saying the CEO has been distracted by commitments to his other companies like Twitter.

In an open letter reviewed by Insider and addressed to chairwoman Robyn Denholm and director Ira Ehrenpreis, 17 shareholders — representing about $1.5 billion in Tesla shares — are asking the electric car maker's board to meet and find remedies by May 25.

"The Board allowed the CEO to be overcommitted at a time when the company faces critical challenges," the letter stated. "Corporate boards can and should intervene if a chief executive appears to be distracted or overly focused on other ventures," it continued.

They want a CEO that "dedicates adequate time and attention to the company" and "overhaul the composition of the Board, including rolling off directors with close ties to the CEO."

"Without a fulltime CEO and a Board willing to provide meaningful oversight, we are concerned that Tesla will not be prepared to effectively navigate the increasingly competitive environment for EV sales, the evolving global regulatory landscape, shifting consumer preferences, ongoing supply chain challenges, and investors' expectations," the letter said.

The investors say the board has "failed to ensure" Musk was "appropriately" focused on Tesla, due to his other companies including SpaceX, The Boring Company, Neuralink, and Twitter. The makeup of Tesla's board has faced criticism in the past. In 2018, a Tesla shareholder sued the company over Musk's $55 billion compensation plan, alleging the CEO had influence over the carmaker's board, which includes his brother and some of his close friends. A judge has yet to issue a ruling on the case.

Amalgamated Bank, Investor Advocates for Social Justice, and Sisters of the Good Shepherd are among the investors who signed the open letter Friday and who want the board to get some more control over Musk. Amalgamated Bank and Sisters of the Good Shepherd did not immediately respond to Insider's request for additional comment ahead of publication.

The letter also mentioned what the investors view as multiple issues facing the company, such as the treatment of its employees, including the litigation with a California civil rights regulator over the allegations that Tesla's Fremont Factory is a "racially segregated workplace where Black workers are subjected to racial slurs and discriminated against."

Courtney Wicks, executive director of Investor Advocates for Social Justice, told Insider: "It's unprecedented for a CEO to have the kind of outside business activities Elon Musk has and it's certainly hurting Tesla."

Wicks said that Musk's outside opportunities don't allow him to "focus on Tesla." She also said that the company has not been responsive to similar open letters in the past.

Tesla and Musk didn't immediately respond to requests for comment from Insider ahead of publication.

Ross Gerber, the president and CEO at Gerber Kawasaki Wealth and Investment Management and a Tesla investor, tweeted on Thursday that the company "needs a Steve Jobs badly," before saying, "or just a full time CEO!" Gerber's name is not listed on the open letter.

This isn't the first time Tesla shareholders have voiced their concerns over Musk's commitment to the company. After Musk acquired Twitter in October last year, Leo Koguan, one of the largest individual shareholders, tweeted on December 14 that Musk had abandoned the electric car maker.

"Tesla needs and deserves to have working full time CEO," Koguan said at the time.

On Thursday, Tesla's stock slid after the company revealed its aggressive price cuts eroded its profit margins in its first-quarter earnings. Tesla aggressively reduced the price of its top-selling cars including the Model 3 and Model Y last quarter, in a bid to boost its market share.