Marketplace Morning Report Lessons in corporate governance from the Trump-Musk spat
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Jun 6, 2025 Elon Musk and Donald Trump are locked in a public feud, raising questions about corporate governance and CEO accountability. Experts weigh in on how personal conflicts can impact shareholder value. Meanwhile, AMC Theaters announces plans to boost pre-movie advertising, igniting debates on audience reactions and industry strategies. The interplay of political power and market dynamics also reveals the challenges companies face in navigating federal scrutiny amidst growing tensions in U.S.-China trade relations.
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CEO Duty vs. Board Power
- CEOs have a fiduciary duty to protect shareholder value but boards often act as their "lapdogs."
- CEO ownership of shares diminishes board power to check harmful CEO behavior.
Political Power Used Secretly
- Presidents have historically used IRS and SEC to punish political foes, but usually secretly.
- Public threats like Trump's are unusual and escalate the stakes.
Boards Need to Show Action
- Boards might pretend to check a CEO to show shareholders they're doing their duty.
- This can help prevent lawsuits from minority shareholders claiming neglect of board responsibilities.