Elon Musk, fiduciary duties, his six companies PLUS his political activities

How many CEO’s have, as Elon Musk is currently doing, ran six major companies simultaneously? Instead, history show’s it to be detrimental to the health of people juggling many companies at once.

In Elon’s case, it’s not just that Elon is CEO or Chairman of six companies at once. He is also extremely focused on political activities under the DOGE umbrella.

How can Elon Musk manage six companies at once, plus his political activities?

Is Elon Musk properly satisfying his duty as CEO or Chairman to those companies? Are Elon’s political activities harming or helping those companies? In other words, is Elon Musk properly fulfilling his fiduciary duty to the companies he leads?

The political activities Elon is performing under the DOGE umbrella are blatanty illegal, unconstitutional, and are doing great harm to the USA Government. Can this harm be stopped if Tesla shareholders launch a lawsuit claiming breach of fiduciary duty?

Elon Musk’s History of Overworking Himself

Chris Paine’s follow-up to Who Killed The Electric Car, called The Revenge of the Electric Car, launched in 2011, focused primarily on the difficulties Elon Musk had in building Tesla Motors into a fledgling electric car manufacturer. In one scene, Elon Musk complained about an extremely stressful phase of getting Tesla Roadster production rolling where he nearly went insane.

Since then, Elon has built SpaceX into a major spaceflight operator, built Tesla into a powerhouse of not just electric cars but energy storage systems, and has launched other companies like The Boring Company, xAI, NeuralLink, and even bought Twitter.

It’s known from other reporting that later phases of building Tesla Motors were just as stressful as the phases shown in Revenge. In some periods of launching Model S or Model X production, he famously kept a cot in the factory so he could sleep there while working 120 hours a week on fixing production problems.

That’s Elon’s pattern – overworking himself to an extreme state while relentlessly driving his employees to do the same.

Isn’t serving as the CEO or Chairman of six companies simultaneously, while regularly extremely overworking himself, the sign of a workaholic? I’m not a psychiatrist, but I think in this case the “workaholic” diagnosis is obvious. Elon himself has said “My days are very long and complicated…Time management is extremely difficult.”

Starting in 2024, perhaps earlier, Elon Musk added to his workload the political work that is currently expressed as DOGE or the Department of Government Efficiency.

The deluge of political tweets by Elon Musk, that have nothing to do with any of the businesses he leads, has to be taking up some time. Further, the DOGE effort in which the DOGE team is invading and destroying US Government agencies also has to be taking up some time. Apparently, the DOGE effort is a new phase where he works 120 hours a week and sleeps at the office.

In a May 2023 interview with the Wall Street Journal, after Elon said the quote above about time management being difficult, he went on to say he focuses “predominantly [on] one company on one day.” The day of that interview he described as a “Tesla Day”, and the next day might be Twitter, and so on. Elon cannot be deeply involved with the details of each business while leading six different businesses but instead must rely on the staff of each company.

Elon Musk’s Fiduciary Duty as a CEO

As discussed above, Elon Musk has a history of overworking himself, and time management was difficult while running the six companies where he serves as either Chairman or CEO. Since then he has become extremely politically involved to the point where he’s described as the Co-President of the USA.

I’ve heard of a thing, “Fiduciary Duty,” that a CEO has a fiduciary duty to the company shareholders, and that shareholders can launch a lawsuit against CEOs who are not fulfilling their fiduciary duty. Rather than trust my sketchy memory about such things, we’ll list out the facts described by what look like reputable websites. In the meantime, ask yourself whether you believe the political work Elon Musk is doing has helped or harmed the companies he leads, and whether those companies are harmed by his political work. Should the Boards of Directors, or shareholders, of these companies start asking him difficult questions?

But, not being either a psychiatrist or a lawyer, I’ve turned to the Internet to learn just what are the legal fiduciary duties of a CEO.

On Wikipedia, we learn that “A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons).” Generally, such a person takes on the role of taking care of money or assets belonging to another.

Several law groups (DunnLaw, Pepper Law) have published pages describing how that principle applies to CEOs. First, any officer or director of a corporation is a fiduciary of that corporation. That is, the corporation belongs to its shareholders, and the officers and directors are hired to take care of that asset (the corporation) on behalf of the shareholders. An officer or director has fiduciary duty even if there is no explicit agreement.

A failure to satisfy their fiduciary duty means that shareholders can hold the individual accountable with a lawsuit. A quick glance at Google News shows that shareholder lawsuits happen all the time over perceived violations committed by the officers or directors of a company.

Harvard Business School of Law says “Accepting funding from investors puts you in a fiduciary role in which you’re responsible for managing their money and putting their needs above your own.” The article goes on to say:

Your investors will want a positive return on their investment, which requires your business to succeed financially. In providing funding, investors trust you to use their capital wisely. To avoid derailing the relationship by focusing on personal interests, it’s crucial to abide by your fiduciary duties.

I added the bold emphasis because it seems the political work Elon Musk is doing is a personal interest. We have to ask whether that work is furthering the interests of the companies he leads.

The Harvard Business School of Law article named four fiduciary duties:

Duty of Obedience which “which encompasses adhering to corporate bylaws, superiors’ instructions, and the law.“
Duty of Information is about being truthful to, and to avoid misleading, those one owes fiduciary duty.
Duty of Loyalty is the obligation to act in shareholders best interests.
Duty of Care is avoiding decisions that harm shareholders interests, and to evaluate the outcomes of decisions before taking action.

Wikipedia says this about the nature of the fiduciary obligation:

Fiduciary duties in a financial sense exist to ensure that those who manage other people’s money act in their beneficiaries’ interests, rather than serving their own interests. A fiduciary duty is the highest standard of care in equity or law. A fiduciary is expected to be extremely loyal to the person to whom he owes the duty (the “principal”) such that there must be no conflict of duty between fiduciary and principal, and the fiduciary must not profit from their position as a fiduciary, unless the principal consents.
— Wikipedia Fiduciary

Harm to companies led by Elon Musk

Elon Musk is CEO and/or Chairman of the six companies named earlier in this article. That means he is an Officer (CEO) of some of those companies, and a Director of others, meaning he has a fiduciary duty obligation to all six companies.

We can easily see a harm to the largest of the companies led by Elon Musk, Tesla. In the wake of political positions Elon has taken in Europe, sales of Tesla vehicles are plummeting in Europe.

These article titles were collected from Google News on February 10, 2024, coming from both the portal to American and German news.

A particular issue in Europe is that Elon Musk is meddling in European politics. He has aired attacks on the Prime Minister of Great Britain, and has said that the repugnant ultra-far-right AfD party in Germany is that country’s only hope. AfD has such repugnant ideas that other far right groups shun them, yet Elon holds them up as a paragon of virtue.

In other words, it looks like the political stances taken by Elon Musk is hurting Tesla. If this trend continues, then we can expect Tesla’s financial picture to begin slumping.

Elon Musk is already facing a fiduciary duty shareholder lawsuit

According to Electrek, Elon Muisk poached a long-time Tesla engineer to work on the DOGE project.

The same Electrek article says there was already a shareholder lawsuit because Elon had previously poached Tesla engineers to staff xAI, another of his six companies. In that case, he is threatening to not build AI products at Tesla unless he’s given more control over Tesla.

In another case, Electrek reports that Elon Musk had asked NVidia to prioritize shipping AI server hardware to Twitter (er… X) rather than to Tesla. Tesla would be using the 1200 H100 GPUs to train its AI models, but instead Twitter is getting those GPUs first, and Tesla would get some H100 GPUs later.

The accusation here is that Elon is inappropriately taking assets (either people or equipment) from one company to another, or in some cases reassigning them to government work under DOGE.

The engineers and other resources named in Elektreks article were taken from Tesla. This means Elon is diminishing Tesla’s abilities, during a period where Tesla is facing a lot of problems. Some of those problems are due to technical issues, while others are due to the public’s growing awareness that Elon Musk is openly pushing ultra-right-wing neo-Fascist causes.

Taking resources from Tesla to prop up Elon’s other companies seems to be a clear violation of fiduciary duty to Tesla.

Likewise, taking resources from Tesla to prop up the DOGE effort is a violation of fiduciary duty.

Conclusion

I’m left feeling frustrated with what I’ve learned about fiduciary duty and how shareholders can enforce it via lawsuits.

Elon Musk is not an elected anything, but has been given a huge political role with which he is working on destroying parts of the USA government, and has invaded the core payments systems of the US Treasury. His actions are unconstitutional and illegal – because, by the US Constitution, Congress determines how money is allocated, which programs are funded, and so forth. An unelected someone with no real government position cannot change that. Instead, there are procedures for changing which programs exist, and the funding levels, which is the yearly budget exercise.

Under the concepts of separation of powers into three branches of government, and checks and balances between those branches, these actions are blatantly unconstitutional and illegal.

It seems that since Elon Musk is spending so much time on these political pursuits, that the companies where he serves as CEO or Chairman would be suffering from neglect. Further, the political positions he is taking should (and seem to be) harming the reputation of those companies.

But, before a shareholder lawsuit has a chance there must be a demonstration of harm. There is news indicating lower Tesla car sales in Europe and perhaps elsewhere. If that trend continues it will constitute harm to Tesla which may be attributable to Elon Musk.

But, having proof of harm caused by Elon Musks actions just means that lawyers can now launch a shareholder lawsuit. Such legal action takes awhile to get underway, and the trial could be lengthy. During that time it’s unlikely Elon Musk will slow down his political activities, but instead he’s more likely to keep on posting commentary to his humongous Twitter audience.

The risk to the USA Government is today, right now. The shareholder lawsuit remedy is too long-winded and slow a process to help avert disastrous destruction of the USA Government.

About the Author
Latest Posts

About David Herron

David Herron is a writer and software engineer living in Silicon Valley. He primarily writes about electric vehicles, clean energy systems, climate change, peak oil and related issues. When not writing he indulges in software projects and is sometimes employed as a software engineer. David has written for sites like PlugInCars and TorqueNews, and worked for companies like Sun Microsystems and Yahoo.