Tesla CEO Vs. Board of Directors: Roles, Responsibilities, Conflicts

  • Skillroads
  • Blog
  • Tesla CEO Vs. Board of Directors: Roles, Responsibilities, Conflicts

 The leader of Tesla, Elon Musk, is again in the center of public attention. After enduring conflicts and discussions, he is stepping down as Tesla Chairman, while keeping the position of the company’s CEO. The Board, however, still is not sure that this decision is going to be beneficial for the company, as Musk was an undisputed leader holding both of the positions for last 14 years. 

We decided to have a closer look at the situation and shed a light on the Chairman – CEO roles.

Elon_Musk

The origin of the conflict

The first concerns appeared earlier this summer when it was admitted that the Tesla Board comprised only one director who was not closely connected to Mr. Musk. Until the last year, Robyn Denholm was the only Board member that didn’t have close ties to the CEO of Tesla or one of his other companies. The solution was found and in order to tighten the company’s corporate governance, two more independent directors were invited to the Board. However, this decision didn’t satisfy all the Tesla shareholders. One of them, Jing Zhao, kept insisting that it is not enough and Elon Musk should be replaced from the Chairman position in favor of independent director to “provide a critical check on possible dysfunctional group dynamics”. This suggestion didn’t receive enough support and the board didn’t vote for Musk replacement.

Elon_Musk

Erratic twits

The hype around Elon Musk arose again after he created dubious posts on Tweeter as for making Tesla a private joint stock company. “Am considering taking Tesla private at $420. Funding secured”, stated Elon Musk, “Shareholders could either to sell at 420 or hold sales and go private”. If this decision was implemented, it could cost Tesla over $10 billion, but the information was not confirmed. Musk was accused of misleading Tesla shareholders and security fraud. Thus, case attracted the attention of Security and Exchange Commission that reached a settlement with Musk’s lawyers that in order to avoid a lawsuit, Musk has to step down as a Tesla Chairperson and pay a fine. Elon Musk backed out of this deal in the last minute and SEC sued. In response to Musk’s behavior, Commission wanted to ban his ability to hold any Executive or Chairperson position in any public company, but later new agreement has been settled. 

According to this agreement, Musk and Tesla have to pay separate $ 20 million penalties which will be distributed between harmed investors and Elon Musk resign a position of the board’s chairman without the right to be reelected for three years. Tesla is now going to hire a lawyer who will control Mr. Musk’s public communications in order to stick to disclosure regulations and prevent such problems in future, as later Elon Musk got back on Twitter with a message “excited to work with Silver Lake and Goldman Sachs”, when no contracts between Tesla and those companies were signed. This situation resulted into reduction of Musk’s influence on the Board, as some of the members who supported him in summer changed their opinion now.

Tesla_Inc

CEO vs Board of Directors

In order to understand what is going to change in Tesla now, we should first explain the peculiarities of CEO and Board of Directors relationship and difference in their main duties. 

According to George Bradt, senior contributor of the Forbes, there is no single way of responsibilities division that would be unique for all companies. However, there is an ultimate difference between these positions. 

CEO is the top dog who represents the company and makes main decisions on its operations. He is a mastermind and driver, while Chairman is a Head of a Board, which is an oversight party controlling the expediency of CEO’s decisions. In other words, CEO is the company’s representative in front of the public; he is also responsible for management, strategies, and decisions, forms the company’s values and oversees overall performance. Board of Directors roles and responsibilities include supervising management team, representing investors, determining the company’s long-term strategies and directions as well as ensuring that CEO’s decisions can be implemented for the benefit of the company. In fact, Supervisory Board can be considered a CEO’s employer and CEO has to report to the Board. On the other hand, the Board meets a few times in a year to overlook the company’s performance, while Executive Director responsibilities include making decisions every day. 

Looking at these roles and responsibilities, it becomes clear that CEO and Board of Directors require different types of personalities holding the positions. It is easy to explain this issue with Deloitte’s Business Chemistry classification system. CEO has to be more of a Pioneer and Integrator, generating ideas and inspiring people to follow them, while Chairperson has to possess strong Guardian traits to control the processes and stick to the policies. It should be also said, that those two roles are often performed by one and the same person. If we have a look at S&P 500 companies list, in most of these organizations CEO and Chairman of the board is a one person, so this strategy can be rather successful. 

Tesla_car

Despite the difference between CEO and Owner of chairperson position, both of them have common interests to lead the company to success. That is why it’s essential that they have a common vision and ready to cooperate. CEO should be working with a Board of Directors to receive their recommendations and be ready to follow them. That is why, if CEO and Chairman don’t trust and respect each other, it may become a real catastrophe for the company.

For good or for bad?

Discussions on these questions don’t stop till now. Actually, there a lot of changes are expected in Tesla. But no one can predict whether they a going to be good. During past years, Elon Musk’s cult of personality was formed in Tesla. He was an undisputed company leader making all the vital decisions as CEO, as well as giving directions on functions of Board of Directors in the company. And no one can imagine another person taking the position of the Chairman. Mr. Musk’s decisions are going to be overviewed and controlled from this moment, so his word will not be a final one anymore. On the other side of the coin, he will have more chance to concentrate on the Tesla development, because it goes beyond any hesitations that Elon is more of a CEO than a Chairman by his predisposition. This may help him to lead the company to success thick and fast while focusing on the CEO’s functions only.  However, a lot will depend on who will take the Chairman’s positions and the relationships between CEO and new Chairperson.  

Keeping abreast of the situation and believing in best!

Random posts
Returnship Programs for Women in Tech

Among all the inequalities between male and female, a major gender gap appears when it comes to women at the workplace. Digging a little deeper, what if female discrimination appears not only in the difference of held positions and salary gap between genders. Let’s have a look at a tech industry. How often do you meet a woman in tech? And now recall women CEOs in the sphere, who you can name? To be honest, aren't that many of them. Whether you’re looking at startup founders, investors or people computing and technical roles, it turns out that women are in rooms full of men.

What to Mention in a Resume if You Have No Work Experience

Are you extremely excited as the job of your dream just got posted? Do you have relevant job experience? No? Fret not! Here are a few helpful tips to use when you want to sell yourself to an employer even when you don’t have enough experience.

9 Lies We Believe About Success

What is success? It’s been defined many times so far. Scientists used to attribute it to wealth, great career, happy family and self-realization. If only it has been that easy! In fact, it means different things to everyone. The real answer is inside of younot in Google or encyclopedia. What is success to you? Let’s give you some time to think it over and focus on myths of it instead. 

What Does CV Design Tells About Your Personality?

Your approach to present yourself on a CV can tell recruiter not just your main professional skills, abilities, knowledge, and experience, but also your personality characteristics. Your personality in CV is visible and it is a complete true. If you think that the font for resume you have chosen or color accents are meaningless to the employer, you are so mistaken. In fact, they have the power to say a lot about you because you opt for design that suits your personality. Keep reading, if you want to know what your graphic design CV tells a hiring manager about you. 

9 Ways to Level-Up Your Productivity at Work

Staying always productive and making the most of your time is crucial for your further career development. In order to increase productivity and achieve success, you have to be more conscious of how you manage your working hours, what is your daily routine and change your habits if needed. We have prepared for you the most useful tips to boost productivity, ways to improve performance at work and most importantly to stress less.

How to Write a Resume for Internship (with examples)

Are you in the process of creating a resume for internship? Do it well by learning what needs to be done in this comprehensive guide. Get your application right the first time!

Easy Ways to Achieve Work-Life Balance

Life balance is crucial for the increased productivity and happiness. Since most people desire to be happy, it is imperative to pursue the balance between their work life and private life. We have compiled excellent tips to help you achieve this balance, and live a fulfilling life.

Hot Tips on How to Recognize and Prevent Burnout before It Hits You

When you detect the symptoms of emotional burnout, you can revive yourself. Thus, it’s better not to get into such state at all. Luckily, there are certain signs that can help you recognize and prevent burnout at work in advance. All you need to do is not ignore them. If you pay attention to these symptoms on time, you can always make changes to your daily routine before you get emotionally drained and lose all your strength and inspiration for work. After all, your main goal is a balanced life. Let’s take a closer look at the most common signs of stress and exhaustion and find out how to recover from burnout as soon as possible.

According to Science, These 5 Tips Will Help Boost Your Career

“Habits are actions that you take on a repeated basis with little or no required effort or thought”. This phrase gives the best definition of a habit, but one thing that is missing here is that a habit is a very useful thing in our everyday life. First of all, it saves our time. We don’t need to spend hours to choose the cafe we want to have breakfast at if we have a habit of having breakfast at one we like most. Of course, you may say that there are good and bad habits. And you’re absolutely right, but here we’re going to talk about 5 backed by science habits that make your career super successful. Because the second good thing about habits is productivity growth. 

 

AI and Facial Recognition Are Game Changers for Recruitment

Facial recognition technology and other AI-powered systems break into hiring and have a huge influence on the job search market. Find out how these changes will impact your life.