How should a corporate board respond to a CEO publicly insulting and shaming a sitting president?
At a regular company, there’s a solid chance that the events of the last few days would spur a board to dismiss a CEO. But will the Tesla board fire Musk to protect public shareholders from potential damages?
“They should,” Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, told Fortune. “But they won’t.”
The Trump-Musk spat is just the latest in a series of events that have forced the question of what role Tesla’s board actually plays in the company.
“Over the years, Musk’s behavior has become more outrageous,” says Elson. “The board’s lack of response makes you wonder, ‘Who are these people? Why are they there?’”
Even considering his own predilection for conflict, Elon Musk’s latest squabble is in a category of its own.
But board experts agree that to expect action from the Tesla board is misguided. “There have been so many ‘Now the board has to do something moments,’ and they have failed every time,” says Minow. “I no longer feel that there is such a thing as ‘Now they have to do something.’”
“No shareholder is going to be able to show that this board is acting in bad faith by failing to replace Musk as CEO, which is really the level that they’d have to show,” she said.
It’s still theoretically possible that a Tesla board director could try to bring about change by suggesting Musk go. But they would have to make peace with potentially losing their roles, says Elson.
“They would say, ‘Look, I will vote to move him along. And if I lose, I leave. I can’t do this anymore,’” says Elson. Whether they’ll do that depends on whether they’re people of principle, he added, or “people of convenience.”
“We’ll have to see,” he said.
