This presentation will take a closer look at the fiduciary duties of directors and the role of regulators in checking high-profile entrepreneurs when they potentially become more damaging than beneficial to the corporation. It will start with an overview of the board’s role in overseeing the CEO, which is based in both the fiduciary duty of care and, if the directors are conflicted, the duty of loyalty. The presentation then will turn to whether regulators and the courts are a sufficient backstop to protect shareholders when boards fail to act. As a case study, we will focus on Elon Musk, including his “funding secured” tweets about Tesla going private, which led to both shareholder litigation and an SEC settlement that included the appointment of a “Twitter sitter” at Tesla to screen his tweets related to the automaker; the 2022 litigation in Delaware over his attempt to renege on his purchase of Twitter for $44 billion, which ultimately was dismissed when Mr. Musk completed the deal; and the impact of his Twitter purchase on Tesla (i.e., whether his time and energy and the diversion of other Tesla resources to Twitter should be addressed by Tesla’s board). The presentation also will consider the cases of other “celebrity CEOs,” including Elizabeth Holmes (Theranos), Travis Kalanick (Uber), Sam Bankman-Fried (FTX), and John Schnattner (Papa John’s).

Matt Lyon, Vice President and Dean, Lincoln Memorial University Duncan School of Law

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