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Tesla Board Faces Scrutiny Over Conflicts of Interest in Handling Director Scandal

Members of Tesla's board were confronted with a challenging situation involving venture capitalist Steve Jurvetson, who had faced a scandal in 2017 related to his personal conduct. An internal investigation revealed that Jurvetson had engaged in inappropriate behavior, including relationships with multiple women in the tech industry and the use of illegal drugs. Some directors suggested he resign due to the negative impact this could have on Tesla's reputation. However, Jurvetson, despite being designated an independent director, had a strong personal and financial relationship with Tesla CEO Elon Musk.

Tesla Board Faces Scrutiny Over Conflicts of Interest in Handling Director Scandal

Musk, who shared a close friendship with Jurvetson and had significant financial ties, privately lobbied other directors to allow Jurvetson an unconventional leave of absence from the Tesla board. Subsequently, Jurvetson voluntarily stepped down from the board in 2020, but he continues to serve as a director at Musk's privately held rocket company, SpaceX.

The situation exposed the intricate web of personal and financial connections between Musk and several members of Tesla's board. Notably, Antonio Gracias, another former independent Tesla director and a close friend of Musk, acknowledged in a 2021 court deposition that the board opted to "do nothing and see what happens" in response to Jurvetson's situation. Gracias and his venture-capital firm hold substantial investments valued at about $1.5 billion in Musk-related companies.


This intermingling of personal relationships and financial interests among Tesla board members has raised questions about the independence of those responsible for overseeing Musk's activities. Such conflicts of interest may be at odds with the loose regulatory guidelines defining independence for directors in publicly traded companies, leaving shareholders concerned about the governance and accountability within Tesla's board.


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