Completely untethered: Tesla’s board has dropped Musk’s leash, and he is running amok

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There must be one burning question in corporate America right now: where is the Tesla board of directors?

As Elon Musk has gone even more rogue, this group of so-called board governance elites are MIA.

After Musk’s announcement of his formation of a new US political party over the weekend, you might expect a bit of blowback from the board, plans to replace the founder with a new chief executive, or some reprimand or the imposition of restraints.

Elon Musk says he has started a new political party.

Elon Musk says he has started a new political party.Credit: Getty Images

Shareholders will voice their disapproval when the shares start trading on Monday night US time. Odds are that this won’t be pretty.

To say the Tesla board, led by the Australian chair Robyn Denholm, is captive to the company’s founder Musk is an understatement.

Musk must now officially be classified as having “left the reservation” – but to date, the board is flat-footed.

While still ostensibly running Tesla, Musk is now running amok. Fresh from his sabbatical overseeing, and then being “retired” from, Trump’s Department of Government Efficiency, Musk has executed an Olympic level triple-twist to engineer a new mission – the establishment of a new political party, the America Party.

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.

After teasing out the idea last week, Musk has now declared the party would be formed with the assignment of getting two to three US Senate seats and the ability to kill off legislation he deemed dangerous or contentious.

In doing so, Musk is further escalating his already damaging brawl with former bestie Donald Trump whose Big Beautiful Bill has been the subject of invective from Musk, who believes its profligate spending will bankrupt the US economy.

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.

Tesla chairwoman Robyn Denholm.

Tesla chairwoman Robyn Denholm.Credit: Paul Harris

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.

Former besties Elon Musk and Donald Trump in the White House.

Former besties Elon Musk and Donald Trump in the White House.Credit: AFP

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.

But as one of his great supporters, Wedbush analyst Dan Ives summed it up on Monday: “Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story.”

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