New York City investment chief calls on Tesla to sanction Musk unless he apologises

Musk endorsed an antisemitic post on X on Nov 15. The post falsely claimed that members of the Jewish community were stoking hatred against white people

Ross KerberReuters
Published : 22 Nov 2023, 02:46 AM
Updated : 22 Nov 2023, 02:46 AM

New York City Comptroller Brad Lander told Reuters on Tuesday that Tesla's board of directors should sanction CEO Elon Musk if he does not apologise for endorsing an antisemitic comment on his social media platform X.

Lander oversees about $946 million in Tesla shares for New York City public retirement funds. That amount is equivalent to a stake of roughly 0.1% in the electric-vehicle maker. Lander's remarks make him the latest Tesla shareholder to call on the EV maker to rein in Musk. Earlier, smaller investors including Nia Impact Capital and Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, raised concerns about Musk's action.

Musk endorsed an antisemitic post on social media platform X, formerly known as Twitter, on Nov 15. The post falsely claimed that members of the Jewish community were stoking hatred against white people. Musk said that the person who made the post was speaking "the actual truth."

Lander said on Tuesday that Musk's action creates problems for Tesla, citing a section of the automaker's code of business ethics that prohibits bullying "at any level of the organization."

"There's a real risk that if he becomes perceived as antisemitic that could have real reverberations for Tesla sales and value," Lander said.

It remains unclear whether Tesla's board will take any action. It has stood by Musk over various controversies, ranging from settling fraud charges with the US Securities and Exchange Commission to the CEO's devotion of time and resources at other ventures such as rocket maker SpaceX, brain chip startup Neuralink, tunnel contractor the Boring Company and X. It also defended him after shareholders challenged his $56 billion worth of compensation in court.

Tesla did not respond to questions about Lander's comments on Tuesday.

Tesla shares, which have nearly doubled in value this year, were trading on Tuesday at about the same level before Musk endorsed the antisemitic post on Nov 15.

Musk has since denied that he is antisemitic, and X CEO Linda Yaccarino told employees that "data will tell the real story" about the company's efforts to battle antisemitism.

Lander said Tesla's board should make clear to Musk that he needs to take steps such as removing his post and apologizing for it. If Musk fails to do so, Tesla's board should consider actions such as docking his pay, suspending him or terminating him, Lander added.

"The board needs to hold him accountable but what we need more of these days is showing how people can grow and change," Lander said.

Lander acknowledged that Musk's contributions to Tesla's success could make the board reluctant to act against him. He wrote to Tesla board chair Robyn Denholm on Monday that failing to take action would show Tesla's code of business ethics to be "toothless."

He also cited the case of automotive icon Henry Ford, whose role in perpetuating antisemitism was recognized as a problem in September by the president of the Ford Foundation.

Musk's endorsement of the antisemitic post led to condemnation from the White House, which accused Musk of an "abhorrent promotion of antisemitic and racist hate" that "runs against our core values as Americans.”

Musk is the largest single holder of Tesla shares with a 20.6% stake, according to the company's latest proxy statement. Proxy advisers, who recommend how investors should cast their votes in annual shareholder meetings, have criticized Tesla's board of directors over issues including their independence

Large corporate advertisers have fled X since Musk bought it in October 2022, amid concerns from civil rights groups that reduced content moderation led to a sharp rise in hate speech.

Several others have left in recent days after a report from liberal watchdog Media Matters for America said content promoting Nazism was appearing next to their ads. Musk has denied this, and sued Media Matters on Monday.

Musk has also made several comments targeting the Anti-Defamation League, a nonprofit organization that fights antisemitism. Tesla and Musk are also defending against allegations of discrimination or racial or sexual harassment of workers in actions brought by state and federal civil rights agencies.

In a public call with investors on Tuesday, Kristin Hull of Nia Impact Capital said Musk's comments amount to "the first time investors have had to deal with a CEO that doesn't appear to be looking out for the best of their own brand ... So we're asking the board to step in and come up with a solution here."

Last week Nia had asked Tesla's board to take actions against Musk such as "censure by the Board, demotion, re-assignment, suspension, or removal"