How should the Corporate Committee respond to publicly humiliating and shamefulness of the current president on its CEO?
It’s not a question that most people need to consider, as few people would dare to directly criticize the White House. If CEOs speak against federal directives, their messages are usually closed or Collective open letters. But this week, Elon Musk changed it all, forcing the issue with long-term public nausea with Donald Trump.
The pair dropped out on Thursday with great anticipation of Trump’s budget, also known as the “Big Beautiful Bill.” Musk asked social media followers if it was time to create a new political party, saying Trump’s tariffs would cause a recession, and even asserted that Trump’s name was in government documents regarding convicted sex offender Jeffrey Epstein. “That’s the real reason they’re not public,” Musk wrote.
This feud has already costly for many of his businesses, including Musk and Tesla. The automaker’s stock took over the news cycle and fell 14% on Thursday, costing shareholders $150 billion. Analysts now warn that a counter-argument with Trump could cost Tesla billions of dollars, given that Trump could remove tax credits on electric vehicles and other measures that helped boost Tesla’s revenue. The company could also face regulatory obstacles around autonomous vehicles. This is a technology aimed at driving Tesla’s future and is cited by Stock Watchers. A sustainable and spectacular performance of inventory. Tesla Bull and Wedbush analyst Dan Ives appeared to speak for investors when he wrote in his research notes early Friday. “This needs to be calm.”
In a regular company, there is certainly a possibility that events over the past few days could spur the board of directors by dismissing the CEO. But will the Tesla committee fire musks to protect public shareholders from potential damage?
“They should,” said Charles Elson, founding director of the Weinberg Corporate Governance Center at the University of Delaware. luck. “But they don’t.”
Quiet board
Trump Mask Spat is the latest in a series of events that forced Tesla’s board of directors to actually play a role in the company.
“Over the years, mask behavior has become more outrageous,” Elson says. “The lack of response from the board is that ‘Who are these people? Why are they there?”
It has long been facing criticism of being too close to masks and is therefore willing to overlook many management issues. For example, it made the masks famous 2018 pay packages that are widely divided For $56 billion, it quietly witnessed public protests and a year-long famous split-up behavior from a CEO, where customers were distancing from the company. and Recent claims An ultrasound report of mask drug use that has emerged in the past without risking the role of masks.
There are several factors as to why that is. Musk is Tesla’s controlling shareholder, where he has it 22% of voting rightsmaking it even more challenging to get the votes needed to force him. The board is also in a tough position in that firing musks could potentially tank stock, given his name is very closely related to the company.
Many directors have particularly close connections with Musk. These include his brother Kimbal Musk, an entrepreneur and restaurant owner, and Joe Gebbia, co-founder of Airbnb and Musk’s friend. As might be expected in a typical EV company, the group does not have a CEO of the automotive industry or green energy.
The director is also very well paid. this year, Delaware court ordered The board pays more than $900 billion in salary after realizing it has paid it so brilliantly. Since 2018, Tesla’s board chair Robin Denholm has won $600 million, far more than people who hold the same position in other companies. “Compensation is so important that it has become almost impossible to become an independent director,” Elson says.
“It’s hard to make a man understand something when his salary depends on his salary not understanding it,” says Nell Minow, a corporate governance expert, citing Upton Sinclair. “That’s this board.”
Certainly, there were indications this year and earlier this year that Tesla supervisors had more control over the company’s governance. last month, Wall Street JournalLast month, the board began searching for successors and reported that it had selected a search company to help them. It also reported that the board met with Trump a few weeks before he announced he would spend less time at the White House. It seemed provoked during the repulsion against Tesla Focus on washing masksn, and Tesla Stock prices reductionIt ultimately urged the board to take action.
But the board completely rejected the reportDenholm calls it “absolutely false.”
Is there anything that will change?
Elon Musk’s latest conflict lies in its own category, even considering his own bias against the conflict.
However, board experts agree that it is false to expect action from the Tesla board. There was a lot of things that “the board has to do something now.” They failed every time,” says Minow. “I no longer feel like there’s something like, ‘Now they have to do something.’ ”
Technically, there is a way that allows the needle to move if the shareholder wants a musk. They can vote on boards from the board via shareholders’ proxy votes, and they hope that new directors will fire Musk. Alternatively, he could try and sue the board for not kicking the mask to the curb when he risks the brand and splits the focus between Washington and Tesla. However, the shareholders who wanted to do that Owns up to 3% stake The company notes Ann Lipton, Associate Dean of Teacher Studies at Tulane University’s Law School, which makes it almost impossible.
“Shareholders will not be able to demonstrate that this board is failing to replace masks as CEOs and acting maliciously.
It is still theoretically possible that Tesla’s board directors can make a difference by proposing a mask’s GO. But they will have to reconcile by potentially losing their role, Elson said.
“They said, ‘Look, I’ll move him and vote, and if I lose, I’ll leave. I can’t do this anymore,” Elson said. Whether they do it depends on whether they are people of principles or “convenient people.”
“We have to look,” he said.
This story was originally featured on Fortune.com.
