Governance Flaws and Leadership Issues at Tesla Inc.: An Analysis of Elon Musk's Control and Board Independence
Overview
This paper examines Tesla Inc.'s governance structures and identifies significant flaws in the company's board independence and leadership practices. The analysis focuses on how CEO Elon Musk's dominant shareholding and public visibility have created concerns about board control, particularly highlighted by investor demands in 2017 for the appointment of independent directors.
What this coursework covers
- Background to Tesla and its founding history, early shareholders, and evolution of the company's product line
- Governance flaws at Tesla including lack of board visibility, CEO dominance, and conflicts of interest
- Investor concerns regarding board independence and the request for additional independent directors
Preview
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Elon Musk's tweet; Am considering taking Tesla private at $420. Funding secured
Name
Affiliation
Course
Professor
Date
Tesla Inc.
Elon Musk's tweet; Am considering taking Tesla private at $420. Funding secured.
Background to Tesla and its pre-existing governance structures;
Tesla Inc., formerly called Tesla Motors Inc., is an American company dealing in electric cars and clean energy. Its headquarter is in Palo Alto in California. Martin Eberhard and Marc Tarpenning founded the company, which was incorporated on July 1, 2003. The recalled EV1 electric cars that General Motors produced inspired them. General Motors later destroyed the EV1 after recalling them. AC Propulsion tzero inspired the founding of Tesla too. It is a company that made electric vehicles but in a limited number in the US in the 2000s. Other initial shareholders include Ian Wright and Elon Musk (Hoffman, 2015). In their Series A contributions, they raised a total of $7.5 million. Out of the total, Musk contributed $6.5 million, making him the main shareholder. Jeffrey Brian Straubel joined later in May 2004, making him the fifth shareholder. The considerable contribution that Musk voted him the Chairperson of the board while Eberhard became the CEO. In 2009, Eberhard went to court to seek a court order that declares the five shareholders as co-founders instead of the initial position that Olen Musk was the sole founder (LaMonica, 2020). The court granted the request. The other member of the board includes Robyn Denholm since 2014, Kimbal Musk since 2004, Ira Ehrenpreis, Antonio J.