Completely untethered: Tesla's board has dropped Musk's leash, and he is running amok
Trump's response was to declare Musk a 'train wreck' that had gone off the rails over the past five weeks.
But not a peep yet from the Tesla board, which in theory is supposed to keep Musk on the rails. Shareholders must surely be waiting for updates from the company.
For perspective, imagine how the board of BHP would react if its boss Mike Henry or Commonwealth Bank's chief executive, Matt Comyn, decided to start a political party as a part-time gig.
They would be sent packing.
For the Tesla board, placing restraints on a rogue chief executive is way more difficult. In part, this is because Musk IS Tesla – its founder, its major shareholder and its strategy engine.
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To the extent that parallels can be found in Australia in the hazards of dealing with entrepreneurial founders, Wisetech's Richard White and Fortescue's creator and major shareholder, Andrew Forrest, would be the closest.
White's complicated personal life, including multiple relationships with women, including WiseTech employees, has resulted in board upheaval following a number of complaints about inappropriate conduct, a number of which have been settled.
A pushback from the Wisetech board was ultimately unsuccessful, leading to a mass resignation of a number of directors. Ultimately, White prevailed.
Forrest's strategic deviation into saving the planet using Fortescue's financial resources to finance green projects has been tolerated rather than encouraged by many shareholders. He has been branded a zealot and has been an outspoken critic – particularly of those in the oil and gas industry. But his family's 36 per cent stake in Fortescue has rendered him an untouchable king of the company.
Meanwhile, shareholders and regulators have attempted to intervene in the governance of Tesla for years – including a 2018 shareholder lawsuit to limit a stratospheric $US50 billion ($77 billion) pay package awarded to Musk based on hitting market capitalisation milestones.
In her ruling in favour of the shareholder, Delaware judge Kathaleen McCormick noted: 'There were undoubtedly a range of healthy amounts that the board could have decided to pay Musk,' McCormick wrote, but she said the board instead 'capitulated to Musk's terms and then failed to prove that those terms were entirely fair'.
But Musk's latest action, which will create for him a major distraction from running Tesla, is arguably much more serious for the company and its other shareholders.
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It threatens to undermine the performance of the company that is already challenged by falling sales volumes and a massive influx of competition from China electric vehicle companies.
Two weeks ago, Elon Musk reportedly fired Omead Afshar, the automaker's vice president of manufacturing and operations, CNBC has confirmed, following declines in car sales in key markets this year. His termination followed the resignation of Milan Kovac, previously head of Tesla's Optimus humanoid robotics program, last month.
At this point, Musk's presence at the helm of Tesla is sorely needed.
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Sydney Morning Herald
13 hours ago
- Sydney Morning Herald
ASX flat after rates hold surprise, mining giants slump
Welcome to your five-minute recap of the trading day. The numbers The Australian sharemarket fell on Tuesday, dragged down by mining giants, after the Trump administration ramped up pressure on trading partners to make deals before harsh tariffs took effect. The Reserve Bank's surprise decision to wait to cut interest rates also led shares to dip and the Australian dollar to rise around 2.50pm (AEST) after the announcement. The currency rose from US65.12¢ shortly before the decision to as high as US65.57¢ in the minutes after. The S&P/ASX 200 ended Tuesday 0.02 per cent lower at 8590.70 after US stocks fell overnight amid a big fall in Tesla shares and a fresh threat from US President Donald Trump to impose higher tariffs on key US trade partners. Seven of the ASX's 11 sectors finished lower on Tuesday, with consumer discretionary, financials, technology and telecommunications higher. The broader All Ordinaries rose 2.3 points, or 0.03 per cent, to 8828.7. Loading The lower finish followed Monday's 0.2 per cent fall as investors awaited the rates decision, which markets had priced in as a 0.25 percentage point cut. The lifters The consumer discretionary sector closed higher. The largest company in the sector, Wesfarmers, slipped after the rates announcement but closed out the day 0.5 per cent higher.
