Tesla (TSLA) CEO Elon Musk's alleged pressuring of board members to use drugs spotlights broad issues in corporate governance, Fletcher School of Law and Diplomacy Lecturer Gautam Mukunda states. Mukunda argues that no CEO is "so brilliant" as to be above accountability.

Mukunda believes Tesla's board seems to view Musk as a "once-in-a-generation genius" who must get anything he wants. However, Mukunda contends "there is no such thing" as someone so talented they aren't improved by oversight.

In Mukunda's view, "a board that is so dependent on" its CEO that it avoids calling out mistakes "is not helping" that leader reach their potential. He notes rules exist to counter the human "tendency" of power corrupting.

Mukunda emphasizes that properly governing a CEO means constructively challenging them. Rather than granting any wish, directors must provide guidance - and discipline when warranted.

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Editor's note: This article was written by Angel Smith

Video Transcript

BRAD SMITH: Switching gears here today-- well, kind of. Tesla is off to a challenging start to the year. The EV maker facing tough financial conditions around slowing EV sales, and now there's a new investor concern over Elon Musk's governance. The "Wall Street Journal" pulling back the curtain on Musk's alleged illegal drug use as well as the personal and financial ties between Tesla directors and Musk.

Here to discuss that report and what it means about Tesla's leadership, we have Fletcher School of Law and Diplomacy lecturer, and "Picking Presidents" author, Gautam Mukunda. Thank you so much for joining us here this morning. First and foremost, when you read through the report like this and ultimately gauge your own type of takeaway around what's taking place at Tesla, the leadership there, and specifically Elon Musk, and what the board and other investors should be thinking about this person as a leader, what goes through your mind?

GAUTAM MUKUNDA: So, I think it's fair to say that there is no class on corporate governance that would hold up taking drugs with your CEO as a model board independent. That's right-- like that's a bad sign. You shouldn't be doing that.

But the broader question is the board's central argument for what they did is that they believe, either implicitly or explicitly, that Elon is a kind of once in a generation business genius and you need to give him whatever he wants to keep him happy. And if you do, it's worth it. That is the central thrust of their decision making. And look, you can believe that. That is not a crazy thing to believe, whether or not you agree with it. You can believe that and still think that they made a mistake.

And the central reason we're-- reason we care so much about these issues about corporate governance about maintaining independence, it's not just about legality. It's not just about process. It's that there is no such thing as a person so brilliant that they're not made better by having people around them who can challenge their ideas and test them and stop them from making mistakes in the worst case. That person does not exist.

You might believe that Elon Musk is the greatest business leader of the 21st century. You might believe he's the greatest since John D. Rockefeller. It does not matter. So for example, Albert Einstein, right? A sort of our byword for genius, the most brilliant scientist of the last era. Albert Einstein was wrong about plenty of things. And other scientists pushed back on him and said, no, I don't think this is right. And science was better because you had that process.

A board that is so dependent on its CEO and so closely tied to its CEO that it cannot do that is a board that is, in a real sense, not serving the CEO, certainly the shareholders. But it's not even helping the CEO be his or her best, because it's not performing that critical function.

SEANA SMITH: Yeah, Gautam, going off of what you were just saying there in terms of that recent behavior, the fact that he has-- Elon Musk acted-- and his behavior has shown certain patterns here of the past, has he made it essentially impossible then, it sounds like maybe potentially here, for the board to do its job?

GAUTAM MUKUNDA: I mean, it sounds like he has. And this is a common pattern, right? This is not like-- any enormously successful leader has a huge tendency to surround themselves with people who will just agree with that. It just happens throughout history. Alexander the Great did that. Napoleon did that. There's nothing new about that.

The reason the way we have these laws and these structures is because of those tendencies so that we can try and counteract them systemically because it's so hard to do it at the individual level. So yeah, so I would be-- it is not a criticism of what Elon has done at Tesla and SpaceX, or any number of other places, to say that he would be better if he had other people around him who could help him become better.