Ethical Implications of Elon Musk Tweets on Tesla's Governance

This argumentative essay examines the ethical implications of Elon Musk's tweets on Tesla's corporate governance. It explores the consequences of Musk's actions, particularly his 2018 tweet about taking Tesla private, and its impact on the company's management and investors. The essay utilizes ethical theories such as beneficence, respect for autonomy, utilitarianism, and deontology to analyze the situation, highlighting the conflict between maximizing profits and adhering to ethical principles. It delves into the resulting fines, settlements, and governance changes, including the appointment of independent directors and restrictions on Musk's communications. The essay further discusses the future actions Tesla could take to minimize the negative impacts of these events, including strengthening corporate governance, enhancing ethical practices, and the challenges the management faces. The analysis emphasizes the importance of ethical decision-making, stakeholder considerations, and the need for a robust code of conduct to prevent similar issues in the future. The essay concludes by emphasizing that while Musk's decisions might have aimed at maximizing profits, they lacked ethical considerations and proper procedures, leading to significant consequences for the company.

System04099
[COMPANY NAME] [Company address]
CORPORATE GOVERNANCE

Contents
Introduction................................................................................................................................3
Critical argument on Tesla and Elon Musk Tweets...................................................................3
Future action and possible barriers faced by the management while minimising the issue......6
Conclusion..................................................................................................................................7
References..................................................................................................................................9

Introduction
The argumentative essay brings out a discussion on unethical issues in the contemporary
business world. The main aim of this argumentative essay is to produce next board meetings
for the directors of the company so that they can improve and enhance the code of ethics to
keep a stop on these contemporary issues (Wayland, 2019).
In order to analyse the case of unethical consequences cause by the Elon Musk tweets and
Tesla, the essay has used several ethical theories such as beneficence deciding what is good
and right, respect for the autonomy, virtues, utilitarian, justice, which has the ethical principle
stating that decision maker must focus on actions (Vanderelst, and Winfield, 2018).
Furthermore, the essay resolves several issues related to tweeting, which must be through
appropriate approval each of the directors and the shareholders. The situation has been
examined under each ethical theory to foresee the negative and positive impact and
consequences.
Critical argument on Tesla and Elon Musk Tweets
The critical issue denying the ethical theory is tweeting of the CEO of Tesla “Elon Musk”
that he was considering Tesla private at $420, which he tweeted in 2018. These few words of
Elon Musk created fire in the management and amongst the investors (Businessinsider,
2020).
The direct consequence forced the Tesla chainman to pay off fine and penalty of $20 million
fees. Musk bought $20 million in the Tesla`s stock to make for fine. The case forced to
appoint two new independent directors to the board of company. Furthermore, he was also
agreed to have the tweets once reviewed and analysed in house counsel of Tesla
(Businessinsider, 2019). The inquiry regarding Elon Musk tweets has led to holding of Musk
in contempt for the violating part of settlement. This has led to situation “pouring flames into

the fire” and led to another battle played at public level (Vanderelst, and Winfield, 2018).
Musk indicates that the humour was serious, which is the reason in creating the nature for
Tesla with an aim to operate best (Boatright, 2017). Tesla private remains gloomy because
Musk will announce an offer to buying the Tesla`s stock at $420 each share. Shareholders has
the choice whether to sell the share at this price as it is private. Tesla`s private can insult
where the company from enormous pressure because of earning cycle that does not have
private allowing the organisation to avoid issues, ands short sellers, which would profits of
the Tesla failure and attack company (Businessinsider, 2020). The Elon has felt that being a
public company, Tesla was continuously facing issues while producing the vehicles and
generate maximum profits when watched closely even musk continues to commit eventual
with Model-3. Purchasing the company and selection the company to become private, that
allow Tesla to stay out of the public eyes (Ferramosca, Onza, and Allegrini, 2017).
The ethical theory to be applied on this situation includes deontology, utilitarianism,
beneficence, and golden rule. The Elon Musk has followed the theory of Hedonism believe
that people can act to maximise the pleasure and not to worry regarding the future. He
believed that people must fill their time with the intellectual pursuits (Tang, 2016). Elon
straightforwardly started focusing on removing the public company and maintaining it as the
private company can manufacture the S-Model far better to remain public company so that it
can pace up the production (Boatright, 2017). The principle of the beneficence suggest the
decision maker to commit what is good and right. The priority of the CEO was good and
profitable but it was not ethical perspective by availing them possible solution to accept the
dilemma successfully (Businessinsider, 2019). This ethical principle is relatable to the
principle of the utility that states that it has to attempt in the generation of largest ratio of the
good deeds (Alexander, 2016). The sudden decision and announcement stipulates ethical
theory striving to achieve greatest possible goal but sudden announcing of withdrawing the

power of public equity traded shares at the premium price and maintaining private company
(Vanderelst, and Winfield, 2018). The unethical practise was not limited to private and public
segment but also Musk does not discuss on special terms and deal criteria with the potential
financing partners and the statement is regarding possible worst transaction, which lacks
adequate base (Pinto, and Picoto, 2016).
On the virtual level, Elon musk have faced several issues due to Tesla, which has affect his
style of leadership. This leader induce everyone to follow a principle of “The first principle
thinking” tool and become more efficient at the work by putting strews on the workers so that
one can get the work done (TechCrunch, 2019). The work ethics of Elon Musk were
questioned but at the same time, he prepared his whole team to stress on the ambitions. It is
seen that his controversial, press conference, media interaction become a topic of rivalry.
Most importantly, board of members are quite unaware regarding the decisions (TechCrunch,
2019). The ambitions production regarding deadlines for Model-3, which has become a
central issue. There are unethical a series of tweets that cause fluctuations in the stock
market, which is a concern for everyone involved with Tesla (Tang, and Ai, 2016). Several
shareholders included series of events at Tesla where shareholders are affected tweet form
(BISHOP, & BOYLE, 2018). Definitive stakeholders have come up with lawsuit against
Tesla and Elon. Most importantly, Elon was not ready to accept the wrongdoing as it is the
part of agreements as per the court paper but Musk will need to comply with Tesla`s new
processes for the social media posts updating organisation`s website and blog during the
investor`s call (Lucas, Wee, and Maat, 2016). Tesla must give any pre-approval regarding
written communications, which contain, reasonably contain, and information material to
company and the shareholders (Pinto, and Picoto, 2016).
Furthermore, ethical theories play an important part in the decision making of the company
(Reamer, 2019). Under this set of theory, the leader has fulfilled one aspect and neglected

other aspects of company has not been fulfilled (Tang, and Ai, 2016). For example- no
appropriate discussion with the shareholders and directors regarding the conversion of
company to private company, lack of board meetings, informing people through board
meetings, no appropriate memorandum of association and just a tweeting is not the way to
announce ownership of the company (Yaokumah, 2020).
After applying utilitarian theory, it is seen that it is important to find one`s ability and value it
as per the consequence (Verduyn, 2018). The selection regarding the choice can yield greater
benefit to most people, which can be said as ethical. On the basis of action, an individual
must perform societal constraints. Ruling on the other hand means it can benefit most of the
people with fair and suitable means (Ferramosca, D'Onza, and Allegrini, 2017). Adding the
benefits to most people means available. This decision of Elon Musk has not at all been
falling under the category of utilitarian considering the consequences of decision maker and
comparing the ability of person to measure through the material gains (Businessinsider,
2019). Elon has successfully decided to favour the profits of the company but without
conducting any specific procedure of distributing the power, and no board meetings. It is
important to think that every organisation has a process to reach the decision (Yaokumah,
2020). Opting the decision all of sudden without getting any approval from directors or
discussing has made the consequences visible. For example- the interference of SEC,
engagement of two independent directors to check the Elon`s tweeter account and finally it
led to the imposition of penalties on the Tesla due to sudden buy back of shares (Lucas, Van
Wee, and Maat, 2016).
Future action and possible barriers faced by the management while minimising the issue
To minimise the impact of scandal regarding sudden conversion of publically traded
company to private company, Elon Musk will not be the chairperson of Tesla. The company
announces to adopt important reforms, which includes communicating with the investors and

pay them financial penalties (O'Kane, 2019). Furthermore, the director of the division
announced that it will follow a resolution, which is intended in prevent market disruption and
also harm the Tesla`s shareholders (Lucas, Wee, and Maat, 2016). With the increasing losses
of the company, Tesla has commented on the settlement before issuing SEC for the
announcement, Musk tweeted regarding the efforts of the company to ramp up the deliveries
of model 3 electric cars (Şahin, 2018). However, the utilitarian theory reflects that the
company must act in such a way so that everyone is benefited but sudden news and tweets
has spoiled the overall benefits made for the company to maximise the company’s revenue
(TechCrunch, 2019). To address the issue and misconduct, it seems important to strengthen
Tesla`s corporate governance and protecting the investors (Businessinsider, 2020). However,
at the end of the August, the company has realised that maintaining public company a more
feasible rather than going for the private company (Şahin, 2018). On the basis of Kantianism,
it is seen that business should also respect the customers at its edge by believing that they can
make decisions benefiting them. The organisation will do empowering of the customers to
accomplish it. Several people have argued that Elon`s Musk motivation for infamous tweets.
SEC`s reported that Musk has emailed board of directors, general counsel, and head of
finance department to convert the tesla as private company (Jones, and Ryan, 1997). For
which he has tried to manipulate the price. These actions of Musk indicates the impact of
organisational factors and settings regarding the ethical issue happening. Morality of benefits
both company as well as each stakeholders remains a myth by reflecting the moral
insensitivity by this ethical issue.
Interrelatedness of the organisation context with issue is measured on the basis of ethical
decision making, which has six dimensions through which one can identify the moral issue
and identify the subsequent behaviour (Jones, and Ryan, 1997). There is a greater need to
enhance the ethical practises by enacting code of conduct. This can be a written form of code

of ethics laid down in article of association as expected by the company and its behaviour. It
can outline the behaviour, which is not acceptable at all and equally what measures should be
adopted if any employee or senior breaks or violates the code of ethics. For example-
organisation with social media policy should be in place so that it can prohibit discussion
leading to unnecessary decision to discipline. Furthermore, to avoid the unethical practises,
employees can look after managers and owners for direction, which tells how they can
conduct themselves. The board of directors must make ethic- based decisions and finally
check the employee`s performance by putting leadership roles at organisation for the same
values (Monahan, and Quinn, 2006).
Several challenges faced by the management includes inappropriate layoffs, lessened
executive departures, mismanaged customer reports, SEC accuses the Tesla to pay off the
penalties and violate the settlement and controversial conference calls, investigations will be
based on deadly crashes, store closures and more layoffs (BISHOP, & BOYLE, 2018).
Before this tweet of musk, tesla has reported that it has suffered from massive loss in 2019
and it struggles in delivering the mass market model 3, which has faced challenges that
includes diminished federal tax credit and slowing demand for the vehicles. This terrible
performance of the company has suffered from manufacturing issues (BISHOP, & BOYLE,
2018).
Conclusion
From the above discussion, it can be seen that Elon`s decision for converting publically
traded company might be a profitable decision for the company while generating cars.
However, sudden announcement for the private venturing and tweeting it is not the
appropriate way to announce the buyback of the existing shareholders. As a CEO, Elon tried
to benefit the company, which is not at all wrong but tweeting it all of sudden and
engagement of other two independent directors to check the tweeting messages, which was

not big deal for Elon by taking the decision all alone was not the appropriate way. Our
argumentative essay have deployed several ethical theories to solve the issues related to
sudden decision, which has to be taken by the company and implement them in the company
to reflect appropriate code of ethics so that Elon musk decisions can work better and lead to
misconduct towards appropriate board meetings.

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