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When Personal Problems Become Business Problems

A divorce is a very private thing, except of course when it isn’t. And an employee’s (or executive’s) private struggles are, well, private — except when various kinds of business analysts start taking notice of those struggles. Case in point: the bitter lawsuit over the terms of the difficult divorce of Elon Musk, one of […]

A divorce is a very private thing, except of course when it isn’t. And an employee’s (or executive’s) private struggles are, well, private — except when various kinds of business analysts start taking notice of those struggles.

Case in point: the bitter lawsuit over the terms of the difficult divorce of Elon Musk, one of the co-founders of PayPal and current CEO of Tesla Motors. For an outline of why the divorce resulted in a lawsuit, see this blog entry, by Jeanette Bicknell: Challenge to Confidentiality in Mediation? Basically, Musk’s ex-wife, Justine, is challenging the terms of the divorce settlement, and it looks likely to be a long, drawn out court battle.

The whole thing is a sad event for the former couple (and their 5 children) but it is also presenting problems for at least one of Mr. Musk’s companies, Tesla. See this piece from auto-industry website FutureCars: Could Elon Musk’s Divorce Affect Tesla’s IPO?

Sources are saying that the upcoming Tesla Initial Public Offering will be for between $1 and $1.5 billion or $10-$12/share, but all of this could be in jeopardy because of CEO Elon Musk’s pending divorce.

So the problem here is more than just the worry that an ugly personal battle is. And it’s not just the worry that Musk’s personal issues are a distraction from his management duties, though that has been suggested. No, according to the FutureCars story, Musk’s bitter divorce could have very serious implications for Tesla Motors, particularly if the court decides that Mr. Musk has to give some of his stock portfolio to his ex-wife:

If [Musk] did lose a large shareholding, that would default Tesla’s recent Department of Energy loan and could cause the S-1 filing for IPO to go in the round file….

So, the question for discussion: do investors in Tesla have the right to tell Mr. Musk to get on with it and settle the lawsuit with his ex-wife? Are investors (or employees, for that matter) essentially stakeholders in the Musk vs Musk court battle? Or is that an entirely personal matter, and none of investors’ business?


p.s., for those of you worried more about Mr. Musk’s emotional state than the financial well-being of his companies, fear not: he just recently celebrated his marriage to Hollywood starlet Talulah Riley.