The Algebra Equation

‘When Europe’s largest pension fund cuts ties with Tesla, you know there’s a story worth reading.

‘ABP looked at Tesla’s governance and thought, ‘We’d rather fund a soap opera—it’s less dramatic and pays better dividends.’

ESG (Environmental, Social, and Governance) principles, Musk’s divisive antics, and a jaw-dropping $585m missed profit—it’s a cocktail of controversy and finance.

Did Tesla lose big, or is this just another headline in Elon’s saga of disruption?

Dive in to explore what really happened.

Tesla approves a performance-based $56 billion pay plan for Elon Musk.

The package sparks criticism, with some shareholders filing lawsuits over governance concerns.

Dutch pension fund ABP, managing €533 billion in assets, considers Tesla’s governance issues and Musk’s compensation excessive.

ABP cites concerns over labour conditions and broader governance issues, voting against Musk’s pay package.

ABP sold its $585 million worth of Tesla shares, stating it could not support the company’s practices despite their alignment with environmental goals.

Tesla stock began to recover shortly after, fuelled by strong earnings and advancements in AI and energy divisions.

Tesla’s stock surges 74% in a year, resulting in $585 million missed profits for ABP.

The decision ignites debates among Dutch citizens, questioning whether ESG principles outweighed financial prudence for pensioners.

In January 2024, a court ruling deemed Musk’s compensation package unreasonable, adding to Tesla’s governance challenges.

Despite European criticism, Tesla’s Model Y becomes the best-selling car in the Netherlands.

Musk strengthens ties with the US government, securing a favourable regulatory environment.

ABP’s Tesla stake was small compared to its positions in  Apple and Nvidia. The fund appears unbothered by the loss, maintaining diverse investments.

Now valued at $1.27 trillion, Tesla seems unaffected, with its stock rising amid a strong US market and international expansion.

For ESG Investors, ABP’s divestment highlights the cost of prioritising principles over potential profits in high-growth sectors.

For Tesla, the incident underscores Tesla’s polarising nature, embodying both groundbreaking innovation and governance controversy.

For Musk, his bold compensation package and outspoken politics continue to generate headlines, keeping Tesla perpetually in the spotlight.

In the clash between ethics and earnings, this saga is a masterclass in the complexities of modern investing.

The debate over balancing principles and profits will only intensify as ESG gains traction.

‘Next on ABP’s radar: stable assets, no drama, and definitely no CEOs who name their children after algebra equations.’