The executives of the car manufacturer encountered a quandary related to drug concerns, with Musk having close relationships with multiple board members.
Elon Musk’s alleged drug use has once again presented Tesla Inc. board members with a familiar conundrum—determining the appropriate course of action regarding the CEO’s behavior, which poses financial and legal risks for both directors and shareholders.
The Wall Street Journal’s article describing Musk’s history of recreational drug use and ongoing consumption of ketamine is the latest in a long line of tests for a board packed with the CEO’s acolytes several of whom agreed less than six months ago to return $735 million to settle a lawsuit alleging they had excessively compensated themselves.
The recent Wall Street Journal article outlining Musk’s history of recreational drug use, including ongoing consumption of ketamine, serves as another challenge for a board comprised largely of the CEO’s supporters. Notably, some members had recently agreed to return $735 million to settle a lawsuit accusing them of excessive compensation. The sources, who chose to remain anonymous, voiced concerns about the potential impact of Musk’s drug consumption on both Tesla and SpaceX.
Elon Musk’s behavior has been a subject of scrutiny in the past, with instances of unconventional actions and public statements. The recent WSJ report sheds light on Musk’s use of substances such as LSD, cocaine, ecstasy, and psychedelic mushrooms, often in social settings like private parties. The article also notes ongoing ketamine use by the billionaire entrepreneur.
Shareholders expressed discontent with the board in the past, citing concerns about Tesla’s succession planning and Musk’s alleged distractions due to commitments to other companies. The tumultuous 2022 takeover of Twitter, now renamed X Corp., further contributed to Tesla’s significant market capitalization loss of $672 billion. As Musk’s close associates, several board members previously returned $735 million to settle a lawsuit accusing them of excessive compensation. Shareholders, too, have expressed dissatisfaction with the board, raising concerns about succession planning and Musk’s commitments to other companies.
Before these events, the board faced legal battles related to Musk’s attempt to take Tesla private in 2018 and his controversial remarks about a cave explorer in the same year. Directors also played a role in proceedings regarding Musk’s $55 billion compensation package in 2018 and the trial concerning Tesla’s $2.6 billion acquisition of SolarCity, a struggling power provider led by Musk’s relatives.
This is not the first time Musk’s actions have stirred controversy. His use of Ambien, a sleep aid, raised eyebrows in 2018, and a subsequent incident involving marijuana use during a podcast interview added to concerns about his leadership.
The recent Journal report, revealing Musk’s use of various substances at private parties, adds another layer to the board’s history of grappling with drug-related concerns. Musk’s marijuana use on comedian Joe Rogan’s podcast in 2018 had previously brought attention to the board’s unease with his use of Ambien, as reported by The New York Times in August of the same year. The WSJ report highlights the financial and legal risks associated with Musk’s behavior. The board faces the challenge of balancing its fiduciary responsibilities to shareholders with the CEO’s unconventional conduct, which has previously led to market capitalization losses and legal battles.
As the WSJ report circulates, the spotlight on Elon Musk’s behavior intensifies. Tesla’s board and shareholders must navigate the delicate balance between acknowledging Musk’s unconventional approach and addressing potential risks to the company’s financial and legal standing. The unfolding situation underscores the challenges faced by a company whose CEO’s actions continue to captivate public and investor attention.