Why Companies Can't Stop Top Execs From Blasting Off To Space or Flying Fighter Jets

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NPR 24 July, 2021 - 03:08pm 91 views

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When Jeff Bezos returned to Earth after a trip to the edge of space, there were sighs of relief — and it's likely some of them were from board members of the $1.8 trillion company he started 27 years ago.

For Amazon's founder and executive chairman, the trip on Tuesday aboard a rocket from his venture Blue Origin may have been the realization of a childhood dream.

But for corporate boards, any time a top executive does something dangerous, it ends up posing a major risk to the the company's bottom line.

Yet as more executives continue to push the envelope, boards recognize there isn't much they can do.

Take Mark Bertolini, the former chairman and CEO of health insurance company Aetna.

A person with a self-described "adrenaline drive," Bertolini got his first dirt bike when he was eight years old, and today, he owns three Harley-Davidson motorcycles and a Ducati. Bertolini also loves downhill skiing.

That was certainly a worry for Aetna's board.

"When I was first named CEO and chairman, and was asked to look at a contract, they had skiing and motorcycling in there as exclusions," Bertolini remembers. "I told them that wouldn't work for me."

Aetna's board had good reason to try. Just a few years before he was named CEO in 2010, Bertolini had been skiing in Vermont. He looked over his shoulder to check something; he ended hitting a tree and diving head-first into a river.

Bertolini was comatose. He spent two hours in the icy water, with five broken vertebrae.

Yet even in the middle of a long, difficult recovery, Bertolini, who was then a top executive, told Aetna's board he didn't intend to stop skiing or riding motorcycles.

"I said that, you know, I would continue to be careful and take the appropriate precautions," he says. "But my life was my life, and I wasn't willing to give those up."

Bertolini is not alone in his push for thrills.

In 2001, when General Motors asked auto executive Robert Lutz to return as its vice chairman, the company wanted to limit what he did in his free time.

Like Bertolini, Lutz was an avid skier, and Lutz also liked to ride motorcycles as well as race cars. He even owned and flew two military jets.

Lutz hasn't forgotten what he told the board.

"I'm happy to rejoin the company," he recalls. "But I need absolute freedom as far as my hobbies are concerned."

Eventually the board relented, and Lutz took the job. (Incidentally, he flew those planes until he was 87, when he failed an eye exam.)

"I encountered these restrictions my whole career," says Lutz, who also held senior-level jobs at Ford and Chrysler. But he adds that he "never took them very seriously, and got away with it for 47 years."

Corporate governance experts say founders of companies especially seem to enjoy a certain kind of impunity.

Bezos, for example, followed in the footsteps of Virgin Group founder Richard Branson, who made his own trip to the edge of space just days earlier.

And on the Fourth of July, Facebook CEO Mark Zuckerberg posted a video on Instagram of him riding on a hydrofoil surfboard, holding an American flag, to John Denver's "Take Me Home, Country Roads."

Hillary Sale, a professor of law and management at Georgetown University, says there should be an open dialogue about an executive's hobbies.

"A good board talks about it, thinks about it, and prepares for it," she argues.

And there's good reason for that. Accidents do happen. It took a year for Micron Technology's stock to recover after its CEO, Steve Appleton, died piloting a small plane in 2012.

Yet boards are often unable to rein in their top executives' activities even if they are aware of the risks to companies.

"It's a bigger question whether a board can really say to somebody like their CEO, 'Absolutely not. You cannot do that'," according to Sale.

That's where executives and corporate governance experts say succession planning comes in.

These days, Bertolini is retired from Aetna, and he sits on a handful of boards.

He is on the other side of the table now, and Bertolini says that has given him a different perspective on the role an executive plays in the success of a company.

"You never want to be in a place where that person is indispensable to the success of the company," he says. "Nor do you want to, if publicly traded, to have a huge impact on market cap."

Bertolini says even as CEO he was mindful of the risks to the company his activities posed. At Aetna, he says, he discussed succession planning at every board meeting.

For executives, having that plan in place helps mitigates some of the risk to companies. And they believe that having daredevil CEOs is not a bad thing after all.

Lutz, for example, believes companies would be more successful with CEOs who like taking risk — "as opposed to, you know, calm, peaceful guys who never want to put themselves at risk, always drive the speed limit, and drive a minivan as their only vehicle."

"Who the heck wants a person like that to lead a corporation, or to be in a leadership position at a corporation?," he asks.

Read full article at NPR

Teslas are basic now but many Musk stans don't want to accept that

Mashable 23 July, 2021 - 08:00am

This may be specific to California, the most popular state for Tesla purchases and EVs in general, along with a few other EV-heavy states like Florida, Texas, and New York. This past weekend a California gathering of more than 1,000 Tesla owners came together, just to celebrate the community around a car company.

As Kelvin Gee, vice president of the Tesla Owners of Silicon Valley club, and a Tesla meetup organizer, told me in a recent call, "the Bay Area is the mecca for Tesla." Other cities and states have clubs, but many struggle to scrape together a handful of attendees at meetings and events.

Seeing this many Tesla fanatics in one place, one can forget that electric vehicles made up only 1.1 million of 276 million registered cars in the U.S. in 2020. EVs are not the norm — yet.

In EV hotspots like California you can see where electric is heading. When the Tesla Model 3 sedan first came out in 2018 I stopped a driver parking on a San Francisco street and asked them to show me the newest sedan with its sparse interior, self-parking abilities, and iPad-like touchscreen.

But three years later, it's the Ford Mustang Mach-E, Polestar 1 and 2, and Volkswagen ID.4 vehicles that are grabbing the interest of Californians. And it's happening right as Tesla has shifted from niche to household name, along with the other two ubiquitous all-electric cars that have risen to prominence, even as they stayed in Tesla's more aerodynamic shadow: Nissan's Leaf and Chevy's Bolt EV.

A CarGurus survey on electric vehicles released in April found that Tesla is the leading brand preference. Toyota and Honda are close behind, both with plans to unveil plug-in electric options in the coming years.

Tesla's eccentric CEO Elon Musk congratulated Ford when the Mach-E debuted at the end of 2019, recognizing that this is about the bigger EV picture. He seems unfazed by a new generation of EVs catching the public's attention, but his loyal following might be more perturbed.

This week when Musk announced that Tesla would open its Supercharger network to other EV companies, club vice president Gee saw it as "an indication that Tesla wants other makers to be successful and will help the overall EV market grow."

Tesla wants to promote EV adoption while bringing in revenue at charging stations from the new non-Tesla drivers who will start to use its infrastructure. That doesn't sit well with some in the Tesla community who feel like Tesla is giving too much to newer, and potentially flashier, EVs from legacy car companies.

One profanity-laced response threatened a lawsuit (as did others), and protested that "Tesla has Prommised [sic] Supercharging without sharing it with others." That user and many others also wrote they were worried about long lines and wait times. Another called the decision to open up the exclusive charging network "incredibly stupid."

"Musk has always said all are welcome," Cars.com executive editor Joe Wiesenfelder said in a phone call. Devoted fans conveniently forget that.

"There’s always going to be a degree of devotion for the company, the product, the service who are viewed to have done it first," Wiesenfelder said. "You can’t take that away from Tesla."

As Gee sees it, the Tesla community breaks into two groups. There's the "legion of ardent fans" who only have eyes for Tesla. And then there are the realists, who want to promote Musk and Tesla's stated mission: "to accelerate the world's transition to sustainable energy."

We're slowly getting there, one Tesla or Nissan Leaf at a time. EY, a global data firm, released findings this week from a June survey of 9,000 respondents from 13 countries that showed 41 percent plan to buy an EV as their next car. That's up 11 percentage points from the same survey in November.

"To achieve the mission, you have to allow for other car manufacturers to be successful," Gee said. He said he would never buy anything other than a Tesla again (he has a Model 3 and Model Y for his family), but it's important that legacy automakers like Ford, General Motors, and Volkswagen are transitioning to electric.

And it's worth noting that non-Tesla startups like Rivian and Lucid are creating EV businesses from the ground up, without a history of internal combustion engine production.

But accepting the risk of being overshadowed can be a tough pill for that army of loyal Tesla and Musk fans to swallow.

Take a look at Twitter, a digital hunting ground where supporters of Tesla competitors get attacked mercilessly. A Tesla owner who dared to buy a Ford Mustang Mach-E was threatened for crossing "enemy" lines.

The Porsche Taycan versus Tesla Model S discourse gets aggressive quickly, as does any mention of Jaguar, Volkswagen, or Audi's EV options. Any story about a Tesla recall, or a Tesla catching fire prompts Tesla fans to engage in a form of EV whataboutism in which they share links about Chevy Bolt EV battery issues and malfunctions.

The hostile environment that erupts to defend Tesla's honor in the face of the many potential "Tesla killers" might cool off once the Tesla Cybertruck arrives. Tesla is at least guaranteed to be back in the spotlight for a while with the release of its cyberpunk electric pickup. Musk has even hinted at doors without handles.

But until then, the petty Twitter squabbles will continue. The Musk fans will never give up on Tesla, and, more importantly, his loyal army isn't going to let any startup or legacy car brand outshine the OG EV-maker.

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