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Comment by skissane | Hacker News Reader

> His empire is divided into so many corporate entities, but they all cross-pollinate and are clearly under his direct control for the most part.

My understanding is that, given Tesla is a public company, any collaboration between Tesla and other Musk companies needs to be approved by the board (or maybe by other C-suite executives) without Musk in the room. Musk can come up with the idea for a collaboration, but then the decision that it is in the best interests of Tesla and all its shareholders to proceed with the collaboration needs to be made independently of him.

By contrast, I don't think the rules apply as strictly to his other companies since they are privately held. The law cares a lot more about protecting shareholder rights in public companies than in private ones.

View on HN

Collaboration is handled by the executive team. The Board of major companies is not so active as to negotiate deals. One may be an activist board member and hold sway over the CEO, but ultimately it's the CEO's job. The Board simply picks the executive team.

The board at Tesla is basically Elon’s buddies. There is no oversight or independence there, they do what he wants.

If law was applied equality to billionaires as it does to regular people, he would be in jail for fraud.

> The board at Tesla is basically Elon’s buddies.

AFAIK, Robyn Denholm, Tesla’s chair, had no particular association with Musk prior to joining Tesla’s board. She is an Australian business executive with a history of working in senior finance roles in Australian and US firms. She was recruited on to Tesla’s board by another (now former) Tesla director, Brad Buss, who to my knowledge has never been that closely associated with Musk either. Musk obviously trusts and respects Denholm, but I believe their relationship is more professional than personal - Denholm lives in Australia and travels to the US for Tesla board meetings.

Wasn't there a shareholder suite that alleged the directors aren't independent because of the above-standard Tesla options they receive? Robyn Denholm excecised and sold $35M worth of TSLA in the past month.

If receiving stock based compensation is grounds for not being independent then wouldn't most companies have an independence issue with their boards? It just seems like a crazy claim on it's face.

> Wasn't there a shareholder suite that alleged the directors aren't independent because of the above-standard Tesla options they receive?

Has a court accepted that argument? I mean, you can come up with all sorts of grounds to claim an independent director isn’t really independent, but unless a court with jurisdiction accepts the argument, it doesn’t really count for anything.

> Has a court accepted that argument

Yes, a Delaware court. It’s why Musk’s pay package is contested and why Tesla redomiciled.

HN is a court of law: some things may fail to meet some legal test, but not that in no way means it automatically becomes subjectively "right". I am adding a datapoint on what's arguable and leaving the judgement of cogency to the reader.

My previously-unstated opinion is: remunerating directors like executives blurs the distinction between those 2 roles in ways that are likely detrimental to long-term shareholders.

> The board at Tesla is basically Elon’s buddies. There is no oversight or independence there, they do what he wants.

This is true at most companies with a competent CEO.

My uncle had an inimical board that tried to remove him, but he somehow replaced them all one by one before they could. Needless to say he replaced them with people who didn't want to remove him ("buddies"; but what kind of a leader surrounds himself with people that want him to fail?). He's never told me how he did that despite my asking several times.

> This is true at most companies with a competent CEO.

No it's not.

Competent CEOs hire boards that align with their world-view but are independent enough to provide useful advice. And almost all startup boards will have investors who definitely will not rubber stamp the sort of thing going on at Tesla.

> And almost all startup boards will have investors who definitely will not rubber stamp the sort of thing going on at Tesla.

Uh why would the Tesla board object to management creating more shareholder value than any other car company ever?

Some companies have board governance rules that mandate a majority of the board seats be of "outside and independent" individuals, but of course this can easily be gamed and, of course, these rules themselves can be put to a vote during shareholder meetings.

Still, it's always worth considering these structures before one invests--especially in med-to-large-cap public companies.

Alternatively, in private small-cap and venture-boards, the seats are nearly always filled by founders and lead investors and I would argue that's a "good thing".

If shareholders are happy, what business is it of yours? If they aren’t happy, they can sell the shares.

SEC destroyed

Following the law should be above the shareholder gain. Mentality like yours is what got us in this situation where people are blatantly abusing the government for personal gain.

It's not enough to just do a poll and say that most shareholders are "happy." If there is even one owner, which there will be, who objects, you need to be able to show that decisions were in the best interest of the company. That doesn't mean said owner has to agree with them, but if there are deals that arguably favor outside companies then you will hear from either the SEC or that one shareholder.

The other comment saying "the law is above shareholder gain" is kind of missing the point thought--the law in question is specifically to protect the interest of shareholders.

This is how you end up with another Enron

Wasn't Musk pulling Tesla engineers to go work on Twitter?

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