The Washington Post Sunday


Tesla’s leader breaks the ‘template’ for executive behavior. Can he get away with it?


Elon Musk, the sayanythin­g CEO, tests the boundaries once again.

The most stunning thing Tesla CEO Elon Musk said in last Sunday’s “60 Minutes” interview may have been that “I do not respect the SEC,” pointedly criticizin­g the very regulatory agency with which he recently reached a settlement that banned him from being chairman for three years and mandated he and his company fork over $20 million each.

The least controvers­ial may have been his answer to Lesley Stahl of CBS News when she described his behavior over the summer as “un-CEO-ish”: “I don’t try to adhere to some CEO template.”

That may seem obvious to anyone who has watched Musk.

Still, it’s perhaps the most telling line from the interview, because it is in part Musk’s desire to not act like other chief executives and his willingnes­s to say things other business leaders don’t that gains him so much attention.

“We’re talking about norms, really — that’s what we talk about when we talk about Elon Musk,” said Gregory Shill, a professor at the University of Iowa’s business school who studies corporate governance and securities regulation.

Coming at a time when President Trump is shredding norms of what it means to be “presidenti­al,” Musk has driven right over what’s seen as convention­al behavior for a public-company CEO. The leader of multiple companies, Musk has been known to sleep on the factory floor and dive in on operationa­l details while upending one industry sacred cow after another.

He’s also called out critics by name on Twitter. He’s taken a hit of marijuana during a live podcast, said a Wall Street analyst’s questions were boneheaded in an earnings call, joked about his company going bankrupt on April Fools’ Day and bizarrely called a British explorer who helped with the Thai cave rescue a “pedo” on Twitter.

And, of course, he tweeted about taking his company private and said funding was “secured” when the Securities and Exchange Commission alleges it wasn’t, landing him in hot water with the regulator.

A searing magazine story in Wired this past week also recounted Musk’s “rage firings,” describing a workplace of interrogat­ion, rampages and audacious expectatio­ns that has been seeing a wave of terminatio­ns and departures. (A spokespers­on told Wired that some anecdotes were “overly dramatized” or “misleading.”)

That’s partly why he gets so much attention, Shill suggested. People seek out patterns when they see unconventi­onal behavior, and many people have seen parallels between Musk and Trump.

“If Hillary Clinton were president, I don’t think Elon Musk would get the attention he has in the same way,” Shill said. “We have somebody who’s engaging in behavior that bears some similarity to the president’s,” and people look for whether they will be held accountabl­e.

Musk was asked in the “60 Minutes” interview whether he saw any similariti­es between himself and the president. He appears to respond that there aren’t “zero similariti­es,” saying Trump is “amazingly good at Twitter” and he thinks the idea of a space force is good — but also disagreein­g with Trump’s support for oil and gas and saying that “we obviously do not agree on the environmen­t.”

Other governance experts also made the comparison. Musk, said Jay Dubow, a former SEC lawyer and co-chair of Pepper Hamilton’s securities and financial services enforcemen­t group, “says things that most people in those positions wouldn’t say, except perhaps the president.”

It’s a reminder that in some ways, a wide gulf remains between how we expect chief executives to behave and what’s actually required for them to do and not do.

“It’s really bizarre that he would go out of his way to stick his thumb in the SEC’s eye and criticize them when he’s still CEO and director of a public company,” Dubow said. “But there’s no prohibitio­n of him saying things about [the SEC]. It’s not illegal.”

As a result, the ramificati­ons for Musk of his statements is unclear. As Tesla’s co-founder and largest shareholde­r, he will probably survive making impulsive statements other CEOs could not get away with.

Yet governance experts said that, even if it’s not a legal no-no, it could still be a mistake for a chief executive to attack the SEC. Most try to stay in the commission’s good graces, particular­ly if they face any kind of investigat­ion.

“To poke the SEC in the eye in this manner — most would consider it ill-advised and illtempere­d,” said Charles Elson, who runs a corporate governance center at University of Delaware.

Musk’s comments could also make it harder to recruit new board members, Elson said. As part of its settlement with the SEC, Tesla has agreed to name two new independen­t directors by Dec. 28.

Making comments like saying he does “not respect the SEC” could make it “hard to bring in someone who is truly independen­t-minded and wishes to exercise the appropriat­e authority of a director,” Elson said.

Some raised questions about other comments Musk made, such as when he said that “the only tweets that would have to be, say, reviewed would be if a tweet had a probabilit­y of causing a movement in the stock.”

Joseph Grundfest, a professor at Stanford Law School and former SEC commission­er, said in an email that “someone might remind Elon that informatio­n can be material even if it doesn’t move stock price, and that Tesla can’t institute controls over ‘all’ his communicat­ion that ‘could’ contain company-relevant informatio­n unless Tesla has appropriat­e pre-disseminat­ion access to his proposed communicat­ions,” referring to the settlement.

Tesla spokeswoma­n Caroline Nolan declined to offer an update on the status of the board’s search for the new independen­t directors.

In a statement after the “60 Minutes” interview, Tesla said that “we can confirm the settlement is being complied with. This includes having a policy (which technicall­y needs to be in place by December 28) that requires preapprova­l of any communicat­ions that reasonably could contain material informatio­n.”

Musk also took issue on Twitter with what he said was the show’s editing of some of his comments. According to notes from the interview provided by the company, Musk followed his comment that he can “just call for a shareholde­r vote and get anything done that I want” by saying “provided I could get support for at least one-third of the other shareholde­rs, which is likely. Not certain, but likely. At the end of the day the shareholde­rs control the company.”

For some experts on governance, Musk’s sentiments about the SEC weren’t surprising — it was his willingnes­s to speak out about them that managed to shock.

“Having worked in Wall Street law firms, I know that attitude is not uncommon,” Shill said. “What’s uncommon and unwise is saying it.”

 ?? LUCY NICHOLSON/REUTERS ?? Elon Musk is known for unfiltered comments. He was at it again when he said during a television interview, “I do not respect the SEC.”
LUCY NICHOLSON/REUTERS Elon Musk is known for unfiltered comments. He was at it again when he said during a television interview, “I do not respect the SEC.”

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