A question any investor – which means most of us because of pensions, etc – has the right to ask of any CEO: What have you done for me lately?
This brings us to Elon Musk, the boss of Tesla for whom the phrase “part-time” feels entirely appropriate given his diverse interests, particularly his political role as the de facto leader of America’s Department of Government Efficiency (Doge), and BFF to President Donald Trump.
The Wall Street Journal, generally a reliable source when it comes to these matters, has reported that Tesla board members have been in touch with headhunters to commence a search for his replacement.
The report was swiftly denied by the group’s chair Robyn Denholm, who described it as “absolutely false” and said the board was “highly confident” in Musk’s “ability to continue executing on the exciting growth plan ahead”.
There has been an awful lot of excitement about Tesla of late, but none of it good. The company’s recent performance has been horrible, which raises the question: even if Denholm and her colleagues aren’t currently seeking a successor, isn’t this something they should be doing?
Musk inspires strong reactions, and indeed, he seems to enjoy whipping them up, as a cursory look at his overactive feed on X will demonstrate. However, if one sets that aside and conducts a dispassionate analysis, it is clear that he is a singularly impressive businessman.
He is not the founder of Tesla, but he became involved at a very early stage and, under his leadership, the electric vehicle maker has turned it into a multi-national business. It is a darling of UK fleet managers, and the world’s biggest carmaker by market value, despite boasting only a fraction of the sales of, say, Toyota – the clear number one by that metric.
That is some achievement. It is hard to imagine a market more difficult for an incoming disruptor to crack than that of automobiles. The capital required by the established players just to design, build and market new models to keep up with their rivals is staggering, let alone doing it from scratch.
Then there are Musk’s other business interests, such as SpaceX. He is a true polymath and he has a legion of fans who would argue he is absolutely worth his multi-billion dollar Tesla pay package, the biggest granted to any CEO of a public company.
Some of these fans are big institutional fund managers, people who have repeatedly used their clout to back Musk and approve a deal that could pay him up to $56bn (£42bn), despite the attempts by a dissenting minority to get it killed off by the courts in the US state of Delaware, where Tesla is incorporated.
That might be because those been along for the ride with Musk have done astonishingly well. Tesla has produced a return of nearly 22,000 per cent since it went public. People will forgive a lot when numbers like that are in play.
But that’s in the past. The problem for Musk today is that the answer to “What have you done for me lately?” is, well, not much. Tesla’s sales have slumped. Its profits have slumped. And its shares? They’ve slumped, too. If you put $100 into Tesla at the beginning of the year, you would be nursing a haircut of roughly $25.
While a company’s share price isn’t in the direct control of the CEO, they nonetheless have a lot of influence over it. Musk’s influence on Tesla’s stock has lately been entirely negative. The divisiveness he revels in, and his political role, have been very bad for business. They aren’t the sole cause of Tesla’s stuttering sales – its range needs new models and a lick of paint – but they have clearly played a role.
Ever since Musk entered the political arena, the Tesla brand has become collateral damage. Tesla’s investors have every right to raise questions about this, not to mention over the time he is spending on the job, what with his political commitments, his other businesses and his side hustle as a social media influencer.
He sought to make light of this with – you’ve guessed it – a tweet. Or is it an X these days?
“Been wearing many hats for a long time,” he declared, posting a picture of himself wearing a baseball cap over a cowboy hat. Funny, ha ha. I’m not sure Tesla’s recently battered shareholders will be quite so easily amused.
Musk is far from the only CEO to be spinning multiple plates, but they are almost without exception very focused on making sure their principal business is firing on all cylinders. You certainly don’t find them heading up government agencies and trashing their brands in the process.
Even if you accept Tesla’s denial of the report, a properly functioning board should be discussing these issues and raising them with the CEO. If the directors don’t like the answers – and I would submit that joking about it by wearing a silly hat is an answer they should not like – then they absolutely should be on the phone with their favourite headhunters.
Musk hasn’t done much for his shareholders lately – and, for a CEO, there really is no greater sin.
