Has Tesla's Board Grown a Spine? And its Legal Consequences.

Texas SB 29 and Delaware SB 21

In my first post here at ProfessorBainbridge.com’s new home, I mused on whether Tesla shareholders had a viable cause of action against Elon Musk for having essentially abandoned his post to indulge his bromance with Donald Trump. I concluded that they did not, opining that a hit to the stock price because the CEO is making some unpopular political moves is simply not the sort of thing corporate law is designed to deal with. Instead, it was up to Tesla’s board of directors to rein in Musk.

I was somewhat skeptical that Tesla’s board would check Musk’s DOGE adventure. So imagine my surprise when the Wall Street Journal reported today that Tesla’s board haad initiated a search for a new CEO, reaching “out to several executive search firms to work on a formal process.” If so, it seems to have worked:

Board members reached out to several executive search firms to work on a formal process for finding Tesla’s next chief executive, according to people familiar with the discussions. …

Around that time, Tesla’s board met with Musk for an update. Board members told him he needed to spend more time on Tesla, according to people familiar with the meeting. And he needed to say so publicly.

Musk didn’t push back. …

“Starting next month,” he said on a conference call about earnings, “I’ll be allocating far more of my time to Tesla.”

Tesla and Musk denied the report.

All of which called to mind Delaware Chancellor Kathaleen McCormick’s rather scathing analysis of Tesla’s board of directors in her decision striking down Musk’s multi-billion dollar pay package. In turn, that called to mind Tesla’s relocation to Texas and Delaware’s SB 21.