Comptroller urges board’s swift response to exercise oversight & judgment and ensure CEO conduct won’t harm company
New York City Comptroller Brad Lander wrote to Tesla’s Board of Directors expressing concern regarding CEO Elon Musk’s explicit support of antisemitic statements, which have not yet been removed, and the Board’s silence about the comments. The New York City retirement systems have approximately $946 million in Tesla shares as of September 30, 2023.
“As CEO, Mr. Musk is the face of Tesla, and his behavior here, for better or worse, directly reflects on the Company,” the letter reads. “As Chair of the Board, you have a responsibility to all shareholders to hold Mr. Musk accountable for actions when they harm the Company and contravene the Company’s Code of Business Ethics. If the Board takes no action against Mr. Musk, it sends a message to all Tesla employees that the behavior of the company’s CEO is unassailable, the Company’s Code of Business Ethics is toothless, and employees are free to take any action or utter any words, no matter how hateful or harmful.”
On November 15, Musk stated that an antisemitic post on X was “the actual truth.” Because the dangerous language in the post was written by Musk it poses a threat to all his portfolio companies including Tesla. On November 16, X CEO Linda Yaccarino condemned antisemitism on the platform but Musk’s original comments still remain active.
The impact has already presented a financial and reputational impact, with condemnation by the White House and major advertisers pulling advertising, including but not limited to Apple, Disney, IBM, Warner Bros, Lionsgate, Sony Pictures and Paramount on the platform X. Lander insisted that shareholders, as well as employees, customers, and decent people everywhere are counting on the board to take action and that Tesla should not condone this troubling behavior. The behavior stands contrary to Tesla’s Code of Business Ethics, which reads in part: “Tesla has been, is and always aspires to be a Do the Right Thing company—in other words, engaging in conduct that you and your family would be proud of.”
Musk’s social media usage has drawn negative attention to his portfolio companies in the past. Prior behavior led to a settlement with the Securities and Exchange Commission (SEC) over his posts regarding taking Tesla private.
In the correspondence, Comptroller Lander also notes that the Tesla Code of Business Ethics has a specific section for CEO and Senior Financial Officers, which reads:
“The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of the Code of Business Ethics or of these additional procedures by the CEO and Tesla’s senior financial officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to the Code of Business Ethics and to these additional procedures, and shall include written notices to the individual involved that the Board has determined that there has been a violation, censure by the Board, demotion or re-assignment of the individual involved, suspension with or without pay or benefits (as determined by the Board) and termination of the individual’s employment.”
Read the full letter to Tesla’s Board of Directors.
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