Tesla shareholders furious with Elon Musk have 2 main options to advocate for change 

Since Elon Musk became a great advisor to President Donald Trump, the policy of billionaires and action that leads the government competence department has sparked a harsh reaction against his companies – especially Tesla.

Peaceful protests were organized in the agents of the electric car maker, but Teslas was also ignited, and shipping stations were shipped. Amazon adventurous sellers are now forming hundreds of thousands per month producing anti -Sala’a drivers who bought the car before becoming a political symbol. Despite a slight increase in the price of the auto company share during the past week, Dog’s rise coincided with a total decrease in Tesla shares.

Amidst the anger at this unusual situation, Ann Lipton, Assistant Dean of Faculty Research at the Faculty of law at the University of Toleen, says that she has provided questions from critics of musk about the legal ways to deter the CEO of focusing his energy on Washington and pushing him to work instead on strengthening the price of Tesla share. In short: Can the shareholders file a lawsuit?

It is a understandable question. However, the idea of ​​prosecuting Musk about the losses of Tesla is also misleading, according to Lipton, who is looking at corporate governance and the role of companies in society. She says that a claim to shareholders against Musk will definitely fail.

Instead, she says luck, The shareholders have only two realistic options: try to go out or vote in new board members, or sell their shares.

“The system is based on the idea that lawsuits are the last resort to discipline the managers of the rebel companies, not the first resort,” Lipton wrote in a recent publication on a site of business law professors.

Why don’t you sue?

Musk and Tesla Board have been sued by shareholders in the past. Recently, many claims of shareholders derivatives (in which investors or officials on behalf of the company are submitted to the company) in a single large lawsuit in the Cansiri Court in Delaware, where Tesla was previously integrated. (It is now combined into Texas.)

But Lipton argues that the issue that Moses is harmful to Tesla by working with Dog lacks the teeth because the plaintiffs will be severely pressed to prove that musk intends to harm Tesla.

She explained that any legal challenge will need to show that Musk, as a manager of companies, failed to show “the duty of care” and “the duty of loyalty” to the shareholders. Proof of the separation in his duty of care means proving that musk is acted with recklessness and “a conscious ignorance of the duties of the individual,” as I wrote. But there was no sign. Regarding his pursuit, she wrote: “He may blind the effects of his actions on the brand, but he did not start destroying them, nor does he ignore any specific action that he knows that it must be taken on behalf of Tesla.”

Regardless of the prosecution of musk, the prosecution of the painting will not work either. Corporate Law is not designed to allow the shareholders to prosecute when they disagree with the decision -making panels on how to manage business. The shareholders can only prosecute it only when they believe that the Board of Directors has failed to provide appropriate oversight.

The Tesla Council, which includes the brother of Musk Kimal, has criticized for being very comfortable with the CEO, but this is not the same to show the lack of good intention in the options of governance, says Lipton. In fact, the Board of Directors in the SEC files, including its latest annual report, revealed that the company “relies heavily” on Musk, but “it does not devote its full time and its interest in Tasala.”

“This is the price you pay for Elon Musk as CEO.” luck.

In a legal challenge, you will not be able to show that Tesla’s managers do not pay attention, as they continue. “They may be legally believed that there is not much discipline that they can practice musk, or they may think legally that this may succeed for the advantage of Tesla, and that there is a closer musk to power.” “These are the provisions that the council is entitled to make.”

The turning point

Although the lawsuits filed against Elon Musk or Tesla Council are not initially, there are other methods that the shareholders can express their dissatisfaction.

The shareholders always say the option to vote against the members of the Board of Directors at the company’s annual meeting, or they are combined together to organize a proxy battle to put the selection of directors on the board of directors.

There is also a much simpler option: stripping their shares in the company as a form of protest. (Danish pension fund, for example, recently made this step.)

Unlike institutional investors who feel some pressure to drop Tesla shares, retailers have shown loyalty and support for musk during the past few weeks. Tim Rolley, professor of strategic management at Rutman College of Administration at the University of Toronto, who is believed to be uniquely vulnerable to the retail investor revolution at the University of Toronto, who believes that Tesla is uniquely vulnerable to the retail investment revolution, given the higher percentage of shares owned by individual buyers.

It indicates that many Tesla car owners who buy anti -Muslim stickers are also shareholders. Rolli refers to the Meme Stock rebellions that dominated the Gamestop and AMC trading as an example of what could happen, if Musk fans operate it, and if their stopping had reached a turning point.

“When they behave,” says about individual shareholders.

This story was originally shown on Fortune.com

2025-03-28 18:10:00