Explore how Tesla’s corporate governance, stakeholder conflicts, independent directors and ethical issues are evaluated in this BU7044 assignment sample
Corporate governance and ethics are a set of processes and principles that guide an organization's operation. It is important because they help a company build trust minimize risks and improve its reputation. Tesla's corporate governance focuses on upholding ethical standards and sustainability and provides transparency through a code of ethics. Highlighting the stakeholder claims and interests of Tesla there are serval ways that it may conflict. This content is analyzed in detail as part of UK Assignments to explore governance models effectively. There is an appropriate model to investigate and address different stakeholders' interests in Tesla. Emphasis on the importance of independent directors to Tesla. Presenting regulatory guidance and compare it with their practical issues. This report assesses Tesla’s management behavior against a corporate code of ethics model.
Tesla is an American manufacturer of clean energy and automotive organizations for care and home power storage. Its headquarters is in Austin it designs develops and manufactures battery electronic vehicles, and sells, and has storage systems. Tesla maintains a publicly available code of ethics to draw expected employee behavior.
Corporate governance is the process of rules and practices that maintain an organization and its relationship with its various stakeholders. Its main plan is to increase long-term value when protecting the interests of various stakeholders.
| High power | Keep Satisfied ● Government ● Regulatory bodies | Manage closely ● Investors ● Suppliers ● Employees |
| Low power | Keep monitoring ● Competitors ● Society | Keep Informed ● Investors ● Customers ● Owner |
| Low interest | High Interest |
Table 1: Mendelow matrix
In the above figure, the stakeholders of Tesla have been identified based on their power and interest through the Mendlow matrix. As per the opinion of Anheier & Baums, (2020), the stakeholders are categorized into four aspects, including keeping informed, Keeping satisfied, keeping monitored, and managing closely. It can be witnessed from the above matrix that the governments of the country need to be kept satisfied along with the regulatory bodies. Though their interest is low in Tesla, their power remains high. Therefore, they need to always be satisfied. Furthermore, the employees, suppliers, and investors need to be managed closely as both their power and interest are high in Tesla. On the other hand, the investors and owners, followed by the customers, always need to be informed regarding the business operations of the company. Moreover, the activities of the competitors always need to be monitored closely to achieve a competitive edge in the global automotive market.
Tesla's key stakeholders
Elon Musk the CEO refers to high internists and high influence are the key players. In terser mentions that increases personal growth and wealth to maintain over the tesla. Its influence refers to significant control over Tesla's direction and operations (ft.com, 2024).
Consumer
The primary stakeholder expected innovative and high-performance eclectic vehicles with an aim for sustainability and advanced technology. Quality product service and fair pricing are the integers.
Investors
Seeking strong financial returns and long-term development from Tesla stock performance.
employee
Interested in fair compression, opportunities, and safe working to drive a sustainable mission.
Governance. interests refer to job security benefits and fair compensation. Its influence mentions limited control over Tesla’s direction and operations (Mastrodascio, 2021).
Governance
Low interstate and high influence keep satisfied. It is interested in ensuring compliance with laws and regulations. Significant control over Tesla operations through regulatory power.
Tesla stakeholder claim
Consumer stakeholder claims against Tesla including an affordable and accessible electric vehicle with advanced technology excrement consumer service and ownership experience. It has been argued that Elon's leadership is important and justifies substantial competition that sometimes aligns with strategic decisions (Palmié, et al.,2024). Some shareholders believe that Musk's compensation package is excise and unfair while others support it.
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Stakeholder interest
Elon Musk, the CEO refers to the interest that improving personal growth, and wealth and maintaining control over Tesla to achieve its overall development and innovation.
Tesla's board of directors is interested in supporting and retaining Elon Musk to ensure the organization’s financial performance. It protects its position and relationship with Musk (ft.com, 2024).
Shareholders that increase return on their investments that allow ethical and fair corporate governance. It maintains the tesla’s long-term viability (Bell,2020). Employee interest refers to job security fair wages and benefits. A positive and ethical work atmosphere.
Stakeholder conflict
Tesla's focus on faster production targets can lead to long hours for employees and it causes concerns about burnout and work-life balance. Frequency changes in production lines and automation can stress job stability for workers. Local communities near Tesla's large factory site may raise concerns about comprehensive environmental pollution and disruption to the local ecosystem. Tesla highlighted investing heavily in research and development for future technologies that can often lead to short-term profit and concerns from shareholders seeking urgent returns (Tricker,, 2019). Elon Musk often erratic public statements and decision-making for the arson market volatility and uncertainty. Increased traffic due to factory operations can strain local infrastructure and cause potential community stress (Haski-Leventhal, 2022). Concern regarding the environmental impact of lithium is important for electronic vehicle batteries that can promote criticism in Tesla supply chain. The board's approval of Musk's compensation raises concern regarding independence and whether it acts in the best interest of shareholders.
Using the suitable model to identify various stakeholder interests in the company
Tesla's story underscores the complications faced by the diverse stakeholders, each with their own motivation and priority. Examining each group's interests and analyzing their interplay can make a better understanding of how they are shaped and are shaped by the tesla's planning and decisions.
Stakeholders
Investment
They are focused on maximizing the return on investment by stock price appreciation and dividends.
Analysis: Shareholders are generally focused on financial returns. Tesla's meteoric rise in stock price by 1,100% is a testament to Musk's overall capability to deliver sustainable returns that help justify their support for his compensation package (reuters.com, 2024). This is why their interest is important as stockholders measure success through the lens of the market performance. High return and growth dividends usually keep shareholders content with this approach it helps to build more strength in their loyalty and backing. The overwhelming shareholder approval of Musk's by a package of highlights their confidence in his vision and leadership. This behavior helps to sound with movement practices with the support of its visionary leaders.
Board of directors
Interest
Balance government, and management, and support the CEO to ensure the organization's success.
Analysis: the board of detractors also plays an important role in corporate governance, revocable for balanced leadership and support. Moreover, the clove relationship with Musk and the board members are airs with concerns about their independence. Actions like granting Musk substantial share options that indicate a priority on renting him, also bring up the question about their objectives (Hopkins & Lazonick, 2024). A board that is too closely aligned with the CEO may face a struggle to provide the essential checks and balances this is help to potentially lead to conflicts of interest. This dynamic underscore the need for a strong and independent board is ensure that the organization stays forward to sound governance approaches that support its visionary leader.
CEO (Elon Musk)
Interest
Growing the organization to maintain controls and achieve personal financial growth.
Analysis: Musk is generally interested in multifaceted. As a CEO his general objective is to drive Tesla's growth and innovation. This main demand for suitable equity awards reflects his confidence in Tesla's potential and his desire for significant financial rewards. Musks is thinking of moving the shifts that Tesla's legal headquarters to Texas further explain these strategies which help to aim it improve operational efficiency and tax benefits (m.economictimes.com, 2025). His brand is naturally linked to the tesla and his leadership style and decisions greatly shaped the organisation's decision and culture. However, this dominant role also poses challenges such as the potential for governance issues and conflicts of interest.
Employees
Interest: employees have been interested in salary hikes, career growth, job security, and other benefits and remunerations.
Analysis: although all of those stakeholders are not mentioned in the case study after developing all the details it can be stated that all of the employees just need all their benefits and remunerations. The quality of the products is also dependent on the progress of the employees and their skill development. Without the help of the employee, the organization cannot be able to sustain its progress and fail to maintain its production. For that reason managing the employees is an effective practice of the organization to secure its production and quality controls and skills development (Alzoubi, 2021).
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Customers
Interest: customers are interested in product quality and innovations. Here the innovative products of Tesla and their performances are influenced by the organisation.
Analysis:
After Musk's leadership, innovation played a significant role in the product development of Tesla. Good quality and top-notch innovation attract customers and satisfy their progress (Hsiao, 2024). Tesla's innovative technology and smart battery option can share a good opportunity to experience the advanced and innovative technology.
Regulators analysis
Regulators play a vital role in maintaining corporate accountability that provides adherence to laws and regulations. The Delaware Chancery court's decision to prevent Musk pay packaging examines regulatory efforts to implement fair governance practices. This regulatory management is important for saving public and investor interest (Ditlev-Simonsen, 2022). It provides that Tesla operates within legal and ethical boundaries. This regulation plan or action can impact public perception and investor confidence. It highlighted the importance of compliance in adjusting Tesla's company reputation and marketing standing.
Community and environment analysis
Tesla's commitment to electric vehicles and renewable energy combat with border environmental interest. Apart from that, it reinforces Tesla's image as a leader in sustainability. The community and the environment have an interest in Tesla's sustainability initiatives (Hsu,2023). It contributes to minimizing carbon emissions and leads to clean energy solutions. Moreover, corporate governance issues and Musk's leadership style can influence public perception and community trust. It ensures that Tesla maintains its commitment to corporate responsibility.
The crucial roles of the Independent directors(NEDs)
Independent directors play a very important role in corporate governance by providing unbiased leadership, strategy for guidance, and ensuring accountability. Their independence from the organization's management allows them to act in the best interest of the shareholders and other shareholders are free from international policies and conflicts of interest.
Significance of the Tesla
Ensuring objective and Independence
Role: The Independent Board of Directors brings an unbiased point of view to the birds which big a very important point for fair decision-making. They act as a counterbalance to the influencer of organizational directors and management that is the decision making, which is made in the best interest of the organization and their stakeholders.
Importance of Tesla: the case studies have highlighted the borders of directors having close personal ties to Elon Musk. This lack of objectivity has guided the decisions that disproportionately favored Musk, such as the contention of the $55.8 billion pay package (bbc.com, 2025). Independence detractors have to help mitigate multiple issues of interest by providing a neutral and balanced approach that all decisions are made with the organization's long-term interests in mind.
Enhancing Corporate Governance
Role: in the corporate governance report, all the board members' practices, Laws, ethical standards, and liability have been carefully mentioned. The main role of developing the corporate government is that this framework has been used to set the policies and manage the regulatory factors to build overall progress and decisions regarding the organization.
Importance: the Delaware Chancery is the court's ruling against Musk's pay deal to highlight the need for strong governance at Tesla. Independent directors can provide important checks and balances to stop the fair practices projects of shareholder interests. Their presence has to signal to the market that Tesla is committed to high standards of governance that help to improve the organization's reputation and overall credibility.
Strategic oversight and guidance
Role: independent directors generally contribute to strategic decision-making by leveraging their expenses and expertise (Nilmawati et al., 2021). Therefore, the board of detractors also provide valuable understanding and guidance on the company’s strategic direction that is helping to ensure that this is aligned with the long-term goals and sustainable growth.
Importance in Tesla: Elon Musk’s vision and leadership are generally navigating Tesla’s innovation, but the strategic leadership comes from the indicated detractors, which ensures that these ambitions are developed in practical and sustainable strategies. Their guidance is able to help maintain the balance for Musk’s bold initiatives with the need for long-term stability and risk management; it helps to ensure the organization’s rapid success.
Risk management
Role: Independent directors help to identify and also help to reduce the risk that helps to ensure the company’s strength. They are generally able to provide an objective assessment of the potential risk and work with the management to develop and establish risk management strategies.
Importance in tesla: tesla generally operates in an adynamic industry with multiple risk factors with market volatility, regulatory changes, and technological disruptions. The independent directors have the power to improve the board’s ability to predict and manage these risks, which are contributing to the company’s sustainability. Moreover, their expertise in risk management is able to help Tesla address complex challenges and create multiple opportunities while maintaining a strong risk profile.
Protecting Monitoring, and maintaining the confidence of shareholders
Role: independent directors support the rights of all shareholders by monitoring them. That is ensuring that the interest of monitoring shareholders is considered in decision-making processes, promoting fairness and equity. On the other hand, they monitor the investor's confidence in being transparent and accountable to governance. They are present on the board and provide comfort to the investors, this approach helps them be committed to the organisation (tesla.com 2024).
Importance to Tesla: Musk’s sustainability and influence over the board have boosted the problem of the promotions of monitoring shareholders. The independent leadership by NEDs that is help to provide investors comfort and protect their interests. That has helped to encourage long-term investment and support from the organization’s strategy initiatives.
Discussing the regulatory guidance and comparing the practical issues to those discussed in the articles
Regulatory guidance
Corporate governance and independence
The regulatory bodies generally highlight the importance of independent directors on a company’s board (tesla.com 2025). The Delaware chancery court's ruling highlighted areas of Tesla’s board's lack of independence, as multiple detractors had close personal relationships with Elon Musk. This is a key regulatory problem because the unadvanced directors are anticipated to act in the best interest of all shareholders, not just the CEO.
The independent directors play a very important role in ensuring that the board of detractors is played fairly and not unduly influenced by the CEO or other insiders (Nili 2022). Their preference is meant to bring deceived points of view and their strict management to the board reviews that help to improve the shareholder trust and confidence in the organization’s governance.
Fiduciary duty
The board of directors have a fiduciary duty to act in the best interest of the organisation and its shareholders. The court found that Tesla’s board of directors breached this great pay package without proper negotiations or indignance evaluations (usatoday.com 2024).
The Fiduciary duties are sound, with both the duty of loyalty and the duty of care. The duty of care is manly required doctors to make informed and careful decisions. On the other hand, the duty of loyalty is the dates that they are made to promote the interests of the organization’s shareholders above their own. In Tesla’s care, the Couts’s findings indicate a failure to seek thesis rules. This is particularly in the absence of independent evaluations of musk’s pay package.
Say on pay votes
During the pay on pay, votes are advisory and not binging, which is an important aspect of corporate governance. Therefore, the shareholders use their votes to experience the approval or disapproval of the organization’s compensation packages. Tesla‘s shareholders overwhelmingly support the pay package, but the courts are ruling which indicates that the shareholder's approval does not forgive the board of directors and their fiduciary responsibilities.
The say on pay votes system is a tool that helps to allow the shareholders to voice their opinions on organizational comparisons. It also disputes the advisory nature of the overall votes which is helpful for providing critical feedback to the boards.
Practical issues
Board composition and independence
Tesla’s board of directors includes Musk’s brother and close friends who are to boots the question about their ability to objectively evaluate his overall compensation. This lack of independence is able to make reason of the issues in the interests and damage the board effectiveness in leading management (Gilma 2021). A board’s composition generally has impact on their ability to functions effectively. When the board members are having to Coles personal or familiar concretions with the CEO for this reason, their naturally have to compromise. This praxis is above to make result in a destination that always going to the CEO’s favor, the CEO is disproportionately seen in this case. The organisation has to priorities an appoint truly indeed detractors who are able to prove an implant's understanding and safeguard against the potential issues of the interests.
CEO compensation
The sized of Musk’s compensation package was outstanding is helped to boost the issues about the sustainability of such as large payouts. Therefore, musk’s leadership has been instrumental in Tesla’s success (harvard.edu 2023). On the other hand, the court is ruling the suggest that the board have to exert more caution and due the diligence in approving the packages.
The CEO comparison is a disputable issue that is generally when it reaches uncitable levels. Moreover, this is very important to incentivize and retain top talents the compensation package must be justified and aligned with the organization’s performance and long-term goals.
Legal and regulatory challenges
Tesla take the decision to move their headquarters to Texas in response to the court’s ruling the highlighting the issues which these organizations face when dealing with regulatory issues. Therefore, Texas has its own business court that does not have the same level of expertise and influence as the Delaware Chancery Court.
Shareholder Activism
This case also underscores the power of shareholder activism. The shareholders are able to influence corporate governance by votes and legal action as seen in the Delaware court case and the ensuing shareholder votes. Shareholder Activism is a very important component of modern corporate governance (Chikonde & Lawrence 2023). This approach helps to empower the shareholders to hold the management accountable and influence corporate policies.
Corporate governance is able to refer to the system by which is companies are directed and controlled. It involves balancing the interstate of an organization's many stakeholders such as shareholders, management, customers, suppliers, finances, governments and the community (Weiss 2021). Tesla’s corporate governance has been a subject of scrutiny that is particularly about the relationship with Elon musk and board of Directors.
Bored independence and oversight: an independent board of reactors is impotent for make effective corporate governance as it helps to ensure that the CEO’s actions are monitoring and tat decisions are made in the best intense of the organisation and stakeholders. For this reason, tesla’s bord is facing lack of independence and it is affecting their organization relationship, that is affecting their personal ties such as Elon musk’s broth Kimbal mused and media investor James Murdoch (Widen & Koopman 2022).
Comparison and incentives: the Delaware court is demanding an unfair precis from Elon musk and hawses paying back $55.8 billion in 2018. The package is generally approved by a board heavily influenced by the musk it was facing criticizing for lacking proper agitation and fairness. This question comes to the bords fiduciary duties to the organization’s shareholders (bbc.com, 2025).
Transparency and accountability: The corporate governance principles are highlighter the importance of transparency and accountability in the managements decisions. Teals management is particularly criticized for the poor transparency and accountability. Musk’s unpredictively behaviors is develop uncertainty a d volatility which is damaging investors’ confidence (Furr 2022). Transparency in the destination making and creel conjugation with stakeholder are necessary for maintain trust and it is ensured that the managements action is align with the organization’s long-term goals.
Ethical leadership
The main features of ethical leadership involve setting an example through actions and principal values. Elon Musk is often praised for their visionary qualities however, in other settings, there has been criticism based on ethical concerns on the leadership quality of Musk. There is no balance in ethical consideration, which is not an effective term for bringing harmony to the management of the organization.
Conflict of Interest
The other issue observed in the management system of Tesla is due to Musk's dual role as the CEO and significant shareholder, which has resulted in the issue of “Conflict of Interest.” This issue has often been observed in the decision-making process by Elon Musk, which results in personal benefit at the cost of other shareholders. Thus, in this case, the management of Tesla is not transparently disclosing the conflict of interest in its management, which leads to undue influence on corporate decisions.
Lack of Accountability
In the overview of ethical management behaviour undertaking responsibility for action is categorized. However, in the case of Tesla’s management indirectly can be as Musk's leadership is characterized by a lack of accountability identified in the controversial public statements.
Board Composition
The composition of the board of a company is an effective means to ensure checks and balances on the CEO’s power guaranteeing the working of the company in the best interest of stakeholders. However, in the case of Tesla management behaviour is negatively influenced in the context of board composition. The board compassion of tesla and several members of the board are costly tied to Elon Musk with personal ties, which can negatively affect the decision-making process. The importance of an independent board is important for ensuring that CEO actions are aligned with the company's strategic goals and ethical standards.
Manipulation of Executive Compensation by Board
The role of the board in the determination of executive compensation is highly important for keeping the interest of the shareholders safeguarded. The exploitation of the corporate code of ethics in the management of Tesla has been done during the pay package of $55.8 billion granted to Musk undertaken through lack of proper negation. This action by the management of Tesla raises concern over the capacity of management behaviour to safeguard the interest of shareholders.
Workplace Diversity and Inclusion Issue
In the global context of the operation of Tesla, the management has been accused and criticized for systematic racism within the organization. This issue has resulted in several lawsuits and reports which have been identified in factories indirectly contradicting the ethical commitment towards diversity and inclusion
Pressurization for achievement of production targets
The management of Tesla has often been pressurised to meet the ambitious production goals compromising the safety and the security of the workers. This has been a complete violation of the National Labour Commission which has negatively affected the company image.
Ethical implication in Data training
The critical consideration of ethics in machine learning quality and diversity of training data. In the case of Tesla, the system is trained on million miles of driving data an ethical concern is raised regarding the company's responsibility in encompassing data in a wide variety of environments (arxiv.org. 2025).
Conclusion
Balancing the organisation interests which is requires effective corporate governance, independent understanding and strategy leadership. Independent directors are crucial to Tesla’s governance network. Their role in ensuring the objectives is help to improve the governance policy, risk management, porting and monitoring shareholders and minting the investors’ confidence is important for the tesla’s long term success. Therefore, the organization is developing understanding and add racing the unique perforce of each steak holder groups. This unique perforce is help to tesla for navigate the protentional challenges and opportunities that is arising and ensuring its continued growth and overall success in their dynamic marketing landscape.
Reference
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