'Brilliant' leaders still need oversight: Professor on Musk

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Tesla (TSLA) CEO Elon Musk's alleged pressuring of board members to use drugs spotlights broad issues in corporate governance, Fletcher School of Law and Diplomacy Lecturer Gautam Mukunda states. Mukunda argues that no CEO is "so brilliant" as to be above accountability.

Mukunda believes Tesla's board seems to view Musk as a "once-in-a-generation genius" who must get anything he wants. However, Mukunda contends "there is no such thing" as someone so talented they aren't improved by oversight.

In Mukunda's view, "a board that is so dependent on" its CEO that it avoids calling out mistakes "is not helping" that leader reach their potential. He notes rules exist to counter the human "tendency" of power corrupting.

Mukunda emphasizes that properly governing a CEO means constructively challenging them. Rather than granting any wish, directors must provide guidance - and discipline when warranted.

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Editor's note: This article was written by Angel Smith

Video Transcript

BRAD SMITH: Switching gears here today-- well, kind of. Tesla is off to a challenging start to the year. The EV maker facing tough financial conditions around slowing EV sales, and now there's a new investor concern over Elon Musk's governance. The "Wall Street Journal" pulling back the curtain on Musk's alleged illegal drug use as well as the personal and financial ties between Tesla directors and Musk.

Here to discuss that report and what it means about Tesla's leadership, we have Fletcher School of Law and Diplomacy lecturer, and "Picking Presidents" author, Gautam Mukunda. Thank you so much for joining us here this morning. First and foremost, when you read through the report like this and ultimately gauge your own type of takeaway around what's taking place at Tesla, the leadership there, and specifically Elon Musk, and what the board and other investors should be thinking about this person as a leader, what goes through your mind?

GAUTAM MUKUNDA: So, I think it's fair to say that there is no class on corporate governance that would hold up taking drugs with your CEO as a model board independent. That's right-- like that's a bad sign. You shouldn't be doing that.

But the broader question is the board's central argument for what they did is that they believe, either implicitly or explicitly, that Elon is a kind of once in a generation business genius and you need to give him whatever he wants to keep him happy. And if you do, it's worth it. That is the central thrust of their decision making. And look, you can believe that. That is not a crazy thing to believe, whether or not you agree with it. You can believe that and still think that they made a mistake.