Biggest Euro Pension Fund DUMPS Musk’s Tesla

Europe’s largest pension fund, Stichting Pensioenfonds ABP, has sold its entire $585 million stake in Tesla, citing concerns over CEO Elon Musk’s compensation and workplace conditions.

At a Glance

  • ABP divested 2.8 million Tesla shares valued at $585 million
  • Decision influenced by disagreement over Musk’s compensation package
  • Concerns raised about poor working conditions at Tesla
  • ABP emphasized commitment to ethical investing over potential gains
  • Tesla’s stock has risen 74% in the past year, with a $1.27 trillion valuation

Major European Pension Fund Exits Tesla Investment

In a move that has caught the attention of investors worldwide, Stichting Pensioenfonds ABP, Europe’s largest pension fund, has completely divested its $585 million stake in Tesla. The decision, made during the third quarter of 2024, involved selling 2.8 million shares of the electric vehicle giant.

The Dutch pension fund, which manages a total of $552 billion in assets, cited multiple reasons for its exit from Tesla. Chief among these were concerns over CEO Elon Musk’s compensation package and reports of poor working conditions within the company.

Controversial Compensation and Workplace Issues

ABP had previously voiced its disapproval of Musk’s compensation package, describing it as “controversial and exceptionally high,” ABP said. This sentiment was echoed in the fund’s decision to vote against the pay package during a shareholder vote in June 2024.

The compensation package, initially valued at $2.6 billion in 2018, had ballooned to an estimated $56 billion before being challenged in court. A Delaware judge rejected the package for the second time, despite shareholder approval, highlighting the ongoing controversy surrounding Musk’s remuneration.

Ethical Investing Takes Center Stage

ABP’s decision underscores a growing trend among institutional investors to prioritize ethical and responsible investing. The fund emphasized that its divestment was not politically motivated but rather based on a careful consideration of costs, returns, and responsible investment requirements.

The move by ABP sends a clear message to corporations that ethical considerations are becoming increasingly important in investment decisions, even when faced with potential financial gains. Tesla’s stock has risen approximately 74% in the past year, with the company valued at about $1.27 trillion.

Tesla’s European Market Challenges

While Tesla’s Model Y was the best-selling car in the Netherlands in 2024, the company has faced challenges in the broader European market. New Tesla car registrations in Europe fell more than 15% from January to November 2024 compared to the same period in 2023, indicating a potential slowdown in the company’s growth in the region.

As institutional investors like ABP continue to scrutinize corporate practices more closely, companies may need to reassess their governance and workplace policies to maintain their attractiveness to large-scale investors. The long-term impact of ABP’s divestment on Tesla and other tech giants remains to be seen, but it certainly marks a significant moment in the ongoing debate over corporate responsibility and ethical investing.