Elon Musk’s purported history of recreational drug usage has become the newest buzz in the turbulent world of Tesla, putting the board of Tesla Inc. in a well-known predicament. The latest report from The Wall Street Journal, which disclosed Musk’s inclination towards recreational drugs like ketamine, introduces an additional level of intricacy to a board that has already experienced hardships with the CEO in the past. Let’s examine the specifics of this developing story that is causing the rumor mill to spin.
The Tesla board, comprised largely of Musk’s supporters, is no stranger to controversy. Less than six months ago, several board members agreed to return $735 million to settle a lawsuit accusing them of excessive compensation. Shareholders had previously expressed dissatisfaction with the board’s handling of Tesla’s succession planning, pointing fingers at Musk’s alleged distractions due to his commitments to other ventures, including his chaotic takeover of Twitter Inc. in 2022.
Musk’s reported drug use, including LSD, cocaine, ecstasy, and psychedelic mushrooms, as detailed by the Journal, is not the board’s first encounter with such matters. Musk’s marijuana puff on comedian Joe Rogan’s podcast in 2018 had already raised eyebrows, and the latest revelations may add fuel to potential litigation. Legal expert Stephen Diamond suggests that disgruntled shareholders could leverage evidence of Musk’s drug use to question his role as an executive.
While Musk’s drug use has implications for his various ventures, including Space Exploration Technologies Corp., Tesla remains the primary source of his fortune. With shares and exercisable stock options valued at $97.6 billion, Tesla contributes significantly to Musk’s $219.4 billion net worth. Musk’s nonchalant response on his social media platform, X, about continuing his current practices if they enhance productivity adds a layer of intrigue to the situation.
The makeup of Tesla’s board, featuring Musk and his brother Kimbal as the longest-serving members since 2004, has faced criticism. Kimbal’s reelection has faced opposition due to perceived lack of industry experience, while other directors, including Ira Ehrenpreis and Robyn Denholm, have encountered resistance from proxy advisers for various reasons.
The recent additions to the board, including James Murdoch, Kathleen Wilson-Thompson, Joe Gebbia, and JB Straubel, have close ties with Musk, raising questions about the board’s independence. Musk’s relationships with Murdoch, Gebbia, and Straubel, as well as his vacationing history with Murdoch, were subjects of scrutiny during a 2022 trial.
Tesla’s directors, despite facing risks and uncertainties, have been well-compensated. In 2020, the company’s decision not to renew its directors’ and officers’ liability policy stirred controversy, but an alternative policy was eventually secured. Musk personally provided coverage temporarily, receiving $3 million for interim coverage.
Gene Munster, managing partner at Deepwater Asset Management, predicts a potential temporary impact on Tesla’s shares due to Musk’s reported drug use. However, he emphasizes that most investors are likely to remain unfazed, considering Musk’s controversies as part and parcel of profiting from his ventures.
In the realm of celebrity gossip and trending stories, Musk’s wild ride continues to captivate audiences. As the Tesla board navigates the challenges posed by its enigmatic CEO, the saga unfolds, leaving investors and gossip enthusiasts alike eagerly anticipating the next twist in this riveting tale.
