A Dutch civil service pension fund, Stichting Pensioenfonds ABP, one of Europe's largest pension funds, made headlines when it decided to sell its entire stake in Tesla. The decision was driven by concerns over CEO Elon Musk's pay package and alleged poor working conditions at the company.
Disagreement Over Musk's Pay Package
ABP sold 2.8 million shares in the electric vehicle maker in September, citing its disagreement with Elon Musk's compensation plan. The fund did not disclose specific details regarding labor conditions at Tesla that contributed to their decision.
Financial Impact
The pension fund's stake in Tesla was valued at approximately $585 million. ABP manages a total of $552 billion in assets, making it a significant player in the investment world.
Controversy Over Compensation Plan
In 2018, Tesla's board and shareholders approved a performance-based compensation plan for Musk. However, legal challenges arose, with a Delaware judge ultimately ruling against the package in January 2024. The judge deemed Musk's potential compensation, which could amount to tens of billions of dollars, excessive.
Shareholder Disapproval
Despite a subsequent shareholder vote in favor of Musk's pay in June, ABP remained critical of the package. The pension fund labeled the compensation plan as "controversial and exceptionally high."
Market Performance and Sales Decline
While Tesla's market value has soared to around $1.27 trillion, the company has faced challenges in Europe. Sales of Tesla vehicles in the region dropped by over 15% from January to November 2024 compared to the previous year.
Conclusion
Despite its success in the market, Tesla's controversies surrounding Musk's compensation and labor conditions have led to significant actions such as ABP's divestment. The company's future performance and investor sentiment remain key areas to watch.
For more business news and updates, stay tuned to Business Insider.
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By: shubhangigoel@insider.com (Shubhangi Goel)
Title: Why a Major European Pension Fund Sold its Entire Stake in Tesla
Sourced From: www.businessinsider.com/europe-pension-sold-entire-585-million-stake-in-tesla-2025-1
Published Date: Mon, 13 Jan 2025 05:27:17 +0000
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