advertising, choosing to release its first ever ad through Twitter.[1]
- Possible violations of state and federal labor law in Mr. Musk’s appropriation of Tesla employees. It is unclear whether Tesla employees were invited to work for Twitter or – either implicitly or explicitly – forced to do so and whether their existing employment contracts were respected. It is also unclear whether any Tesla employees refused to make the transition and whether their position was threatened or if they were fired. Despite Mr. Musk facing multiple lawsuits for illegally firing Twitter employees,[2] Tesla’s Board has not announced any investigation into Mr. Musk’s treatment of Tesla employees, potentially shirking its duty to prevent the company from breaking the law.[3]
In this same letter, I posed a series of questions to the Board to determine if it was properly addressing the corporate governance concerns posed by Mr. Musk’s dual CEO roles at Tesla and Twitter. To date, the Board has refused to provide answers to these important questions.
New Concerns about Mr. Musk’s Dual Roles
Concerns about Mr. Musk’s actions as Tesla CEO have only increased in recent months. In April 2023, a group of 17 major Tesla investors wrote an open letter to Tesla’s Board expressing concern “that the Board of Directors is failing to adequately represent the interests of Tesla’s shareholders.”[4] The letter notes that Mr. Musk “appears to be distracted or overly focused on other ventures” and the Board’s “meager oversight” over his behavior is “jeopardizing [Tesla’s] long-term value.”[5] Moreover, the letter notes the reported “close personal relationships” between Mr. Musk and several members of Tesla’s Board, as well as Board members’ “exceptionally high compensation,” expressing concern about the Board’s “objectivity, independence, and ability to prioritize the needs of Tesla and its shareholders.”[6]
The group asked the Board to either limit Mr. Musk’s commitments or announce a Tesla CEO succession plan, and to remove directors with close ties to Mr. Musk from the Board.[7] The letter also indicates the group’s belief that Mr. Musk’s actions have meaningfully harmed shareholders: as of April 3, 2023, nearly one year after Mr. Musk first disclosed his stake in Twitter, “Tesla had lost $582.4 billion in market capitalization.”[8] Over that same period, Tesla’s reputation dropped from 12th to 62nd among the top 100 most visible brands, falling “across all nine measured
- ↑ Business Insider, “Elon Musk said Tesla would finally advertise. It just dropped a video on Twitter — is this its first commercial?” Grace Kay, May 22, 2023, https://www.businessinsider.com/watch-tesla-elon-musk-first-ever-electric-car-ad-2023-5.
- ↑ CNN Business, “Former employees suing Twitter speak out on Elon Musk’s ‘clumsy and inhumane’ layoffs,” Clare Duffy, December 8, 2022, https://www.cnn.com/2022/12/08/tech/twitter-employees-lawsuits-elon-musk/index.html.
- ↑ See, e.g., American Bar Association, Jeremy S. Piccini, “Director Liability, The Duty of Oversight, and the Need to Investigate,” April 30, 2011.
- ↑ Letter from Tesla Investors to Tesla Directors Robyn M. Denholm and Ira Ehrenpreis, https://static1.squarespace.com/static/5d374de8aae9940001c8ed59/t/644298578c858b5963c7a411/1682085975961/TSLA+23_Board+letter_FINAL.pdf.
- ↑ Id.
- ↑ Id.
- ↑ Id.
- ↑ Id.
3
