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--:-- Noel King: Elon Musk welcomed a 12th child into the world earlier this year. And last week, we learned mom is also the mom of his twins and an executive at one of his companies, Neuralink. They met at work. Who would have believed it? Scandal!
--:-- Noel King: Siobhan Zilas. Neuralink currently has zero job openings in HR, so that relationship must be deemed kosher, even if it seems questionable. Meanwhile, a lawsuit from eight of Elon's former employees at another of his companies, SpaceX, accuses him of creating a perversely sexist culture. Elon Musk is running a, quote, animal house.
--:-- Noel King: SpaceX has 15 openings in HR. Recently, Tesla's shareholders, Tesla's head of HR quit in May, had an opportunity to send Elon Musk a message. And they said, great job, guy. Coming up on Today Explained, Teflon Elon.
--:-- Noel King: Support for Today Explained comes from the FIFA World Cup, of all things. The FIFA World Cup 26 is coming to North America next summer. It is the ultimate celebration of sports and culture. You can get closer to the beautiful game with a hospitality package, closer to the action, The best seats, the best suites, closer to match day and that world-class food and that world-class entertainment, closer to the experience of a lifetime. Book a hospitality package at fifaworldcup.com slash hospitality.
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--:-- Noel King: It's Today Explained. I'm Noel King. Joe Palazzolo is an investigative reporter at The Wall Street Journal. Joe recently wrote a piece about several women who worked at SpaceX and received unusual amounts of attention from CEO Elon Musk.
--:-- Joe Palazzolo: Yeah, so in the early 2000s, she's a SpaceX engineering intern. And she had been introduced to Musk during her internship. And then she kind of boldly sends Musk some pointers for improving the company. And so that outreach leads to a date, which leads to a kiss, and then a sexual relationship, according to what she told friends.
--:-- Noel King: So, you know, they bonded over Star Wars. And a year after the internship, so she's now a fresh college graduate, Musk invites her to this exclusive Google event in Sicily.
--:-- Joe Palazzolo: So then you fast forward a few years, and Musk contacts her about a job on his executive staff. It's a high-level role. It's like a really big job for someone a few years removed from college. But the description is kind of amorphous, right? She's to find problems and fix them at SpaceX.
--:-- Noel King: And so she's really excited about the job. She moves from New York to L.A. And Musk tries to rekindle their relationship. So she's telling friends that he invites her for drinks and comes on to her and touches her breast.
--:-- Joe Palazzolo: You know, one of them recalled her saying that Musk said, oh, I'm so bad, I shouldn't be doing this. And so, you know, she's at the company now, and Musk continues to lavish her with attention. He's sending her late-night texts to come over. Sometimes she goes over there, sometimes she either sleeps through or ignores his invitations.
--:-- Noel King: And she tells friends that his behavior is making what's already a pretty tough job even harder. So she's unhappy at SpaceX. She doesn't have any authority, she's telling friends.
--:-- Joe Palazzolo: She's having trouble getting executives to take our ideas seriously. Sometimes she's hiding out in the bathroom there, right? This is what she's telling friends.
--:-- Noel King: And meanwhile, Musk is texting her, like, a lot. And one of the late-night texts that we reviewed and that we recount in the story, you know, he's like, come by, you know, this late-night text. And when she doesn't respond, he, like, quadruple texts her, right?
--:-- Joe Palazzolo: He's like, look, it's either me or 6 a.m. exercise. And then a little bit later, he's like, just finish the Model 3 production call. It's going to be hell. And then, you know, then he's like sending another text, like, are you coming over? You know, if not, I'll probably trank out.
--:-- Noel King: He says he's too stressed to sleep naturally. And then when she still hadn't responded, he writes, probably best if we don't see each other.
--:-- Joe Palazzolo: In the morning, she responds and is like, you know, sorry, I fell asleep. And then we also have a text exchange in there between her and a friend that takes place, you know, right after this invitation.
--:-- Noel King: And she's kind of like contextualizing the invitation. She's complaining about how she feels like an imposter at the job and how Musk's behavior makes it so much worse.
--:-- Joe Palazzolo: And her friend is like, well, if it's a problem, why don't you just chill on hanging out with him? And then she sends her friend Musk's late-night invitation and says, I think you broke up with me.
--:-- Noel King: And then she kind of concludes with, why are all the men in my life so weird?
--:-- Joe Palazzolo: So she is telling friends that the job isn't going well because he got awkward with Musk.
--:-- Noel King: Eventually, she's moved off the executive staff to a role reporting to another engineer. And then in 2019, after less than two years at the company, she leaves.
--:-- Joe Palazzolo: All right. So you reported this in the journal. It is worth knowing that through her lawyers, this woman told a different story of what happened.
--:-- Noel King: What is she saying happened?
--:-- Joe Palazzolo: Right. So our reporting and what she said through her lawyers lines up in a lot of parts, but it also departs in some ways.
--:-- Joe Palazzolo: So as we were reporting the story, we got contacted by lawyers at Clearlock, which also represents Musk and Tesla. And so they told us they're representing this woman.
--:-- Noel King: And in response to our reporting, like our request for comment, they sent us affidavits signed by the women.
--:-- Joe Palazzolo: What the affidavits said, what the woman said through these affidavits is that, yes, she and Musk had a romantic relationship before she returned to SpaceX in 2017.
--:-- Noel King: But then they sort of later qualified that and said that they never had sexual relations.
--:-- Joe Palazzolo: And then she said, you know, in no uncertain terms, that there was no romantic relationship between 2017 and 2019 when she worked there as a salaried employee.
--:-- Noel King: You know, she said that nothing Elon did towards me during either of my periods of employment at SpaceX was predatory or wrongful in any way.
--:-- Joe Palazzolo: She said that yeah she did go over to his house late at night while she worked at SpaceX but you know it was just to talk and watch anime.
--:-- Noel King: This type of relationship that you reported on was not isolated to this woman.
--:-- Joe Palazzolo: Tell me about the other women in your story.
--:-- Noel King: Yeah, so I'll start with the one who leaves the company in the summer of 2013, and she comes back with a lawyer.
--:-- Joe Palazzolo: And in mediation with the company, she alleges that Musk had asked her on multiple occasions to have his babies.
--:-- Noel King: Musk has said, you know, over and over that we face an underpopulation crisis. And he encourages his employees to have kids. Like, that's just something that he does.
--:-- Joe Palazzolo: I can't emphasize this enough. There are not enough people. And I think one of the biggest risks to civilization is the low birth rate and the rapidly declining birth rate.
--:-- Noel King: If people don't have more children, civilization is going to crumble. Mark my words.
--:-- Joe Palazzolo: Is this why you have so many children? I'm trying to set a good example.
--:-- Noel King: The third woman's story also involves Gwen Shotwell, who is SpaceX president and COO.
--:-- Joe Palazzolo: This one, the woman alleges she's telling her friends and family about this contemporaneously.
--:-- Noel King: She's saying that she's retaliated against at SpaceX by Shotwell.
--:-- Joe Palazzolo: And the retaliation, you know, happens after Shotwell accuses this woman of having an affair with Shotwell's husband.
--:-- Noel King: So, like, that's kind of a story on its own.
--:-- Joe Palazzolo: And we describe emails in the story where, you know, Shotwell's husband is telling this woman Gwen thinks we're having an affair.
--:-- Noel King: And the reason that Gwen thought they were having an affair is because this woman was helping Robert Shotwell, her husband, plan a surprise birthday party for Gwen Shotwell.
--:-- Joe Palazzolo: And she had a bunch of boxes at her house. The woman did, you know, kind of on her own time.
--:-- Noel King: She's working for Shotwell and Musk and so she's helping plan this party.
--:-- Joe Palazzolo: She has like boxes with bullhorns that Robert had sent over there and, you know, other party stuff.
--:-- Noel King: And, you know, she is about to leave town and is arranging for Robert to come pick him up and she gives him a call.
--:-- Joe Palazzolo: And that's what sort of triggers, according to Robert Shotwell, Gwen's suspicion that they were having an affair.
--:-- Noel King: So, you know, pretty soon after these affair allegations, Shotwell is telling the HR department that she wants this woman gone.
--:-- Joe Palazzolo: After that happens, this woman is now working exclusively for Musk.
--:-- Noel King: And according to what she told people at the time, Musk comes up to her at the office, invites her for drinks.
--:-- Joe Palazzolo: And, you know, she goes over there and that initiates a month-long sexual relationship.
--:-- Noel King: It ended pretty badly because she sort of initially thinks that this is something real.
--:-- Joe Palazzolo: And pretty soon is telling friends that she's feeling used.
--:-- Noel King: And, you know, as the tensions kind of ratchet up, Musk has his chief of staff, Sam Teller, negotiate an exit agreement for the woman that includes $85,000 for some unpaid work that she had done at Tesla.
--:-- Joe Palazzolo: And, you know, so she signs this agreement for that money that requires her to, you know, not discuss anything about Musk or her services to him.
--:-- Noel King: The question that leaps to the top of my mind is, Is this behavior that you documented in your reporting just unusual and grody?
--:-- Joe Palazzolo: Does it break SpaceX's rules? Is it illegal? Can you sort of put a fine point on where this falls on the spectrum of workplace abuses?
--:-- Joe Palazzolo: Yeah, sure. I mean, for starters, there have been a lot of stories about executives, you know, getting fired, their boards, throwing them out, and sometimes paying financial penalties for having affairs with subordinates, right?
--:-- Noel King: So there's kind of a cultural reaction to it.
--:-- Joe Palazzolo: Then there's the SpaceX policy, which, you know, really discourages employees from having romantic relationships with people they supervise.
--:-- Noel King: And then there's kind of this broad shift since Me Too where companies are implementing hard bans on supervisor-employee relationships.
--:-- Joe Palazzolo: And they do that because there's this inherent power imbalance between the supervisor and the employee.
--:-- Noel King: And then it can also cause sort of conflicts of interest in the workplace.
--:-- Joe Palazzolo: And obviously sexual harassment is legal under state and federal laws.
--:-- Noel King: But there's also kind of this theory of harassment called sexual favoritism that some courts have recognized, where if you are an employee and your colleague is having an affair with your boss and is getting preferential treatment as a result of that, you can make a claim of hostile work environment.
--:-- Joe Palazzolo: So there are kind of a lot of different lines that this behavior as alleged could cross.
--:-- Noel King: How have Elon Musk and SpaceX responded to your story?
--:-- Joe Palazzolo: Musk hasn't responded to it at all.
--:-- Noel King: He didn't respond to our request for comment.
--:-- Joe Palazzolo: And Shotwell did respond through SpaceX's public affairs department.
--:-- Noel King: And, you know, what she said, I'll just quote her right here.
--:-- Joe Palazzolo: The untruths, mischaracterizations, and revisionist history in your email paint a completely misleading narrative.
--:-- Noel King: You know, then she says, I continue to be amazed by what this extraordinary group of people are achieving every day, even amidst all the forces acting against us.
--:-- Joe Palazzolo: And Elon is one of the best humans I know.
--:-- Noel King: She also says that all allegations of harassment are, you know, investigated and handled appropriately.
--:-- Joe Palazzolo: Why then was it important for you to do this reporting?
--:-- Noel King: Why do you feel like this is significant?
--:-- Joe Palazzolo: Well, look, we wanted to see what it was like, you know, for a woman working closely with Musk.
--:-- Noel King: And as we were doing our reporting, we kept hearing about these examples.
--:-- Joe Palazzolo: That's not to say that every woman who's worked for Musk has, you know, had a bad experience.
--:-- Noel King: We talked to people who had good experience.
--:-- Joe Palazzolo: SpaceX is a very mission-focused place. It's full of like you know young brilliant people.
--:-- Noel King: And some of the women that we spoke with said that they felt like they had an experience there an opportunity that they wouldn have been able to find elsewhere.
--:-- Joe Palazzolo: But as we were reporting and we were talking to people and hearing about these experiences, we thought it was important for people to know, especially prospective employees or investors.
--:-- Noel King: You know, I mean, this is information that we thought was important in decision making.
--:-- Joe Palazzolo: Joe's story ran on June 11th, and 48 hours later, shareholders in one of Musk's other companies did have the option of using this information in their decision-making.
--:-- Noel King: You will not believe what happened next.
--:-- Noel King: Support for Today Explained comes from Built Rewards.
--:-- Joe Palazzolo: These days, it seems like everybody has a rewards program.
--:-- Noel King: You swipe your card and you get one cent on the hundred dollars.
--:-- Joe Palazzolo: But with your rent, frequently, you just pay month after month.
--:-- Noel King: You never get anything from it other than that roof over your head.
--:-- Joe Palazzolo: Not anymore, says Built Rewards.
--:-- Noel King: Built Rewards says it lets you earn points on your rent.
--:-- Joe Palazzolo: By paying rent through Built, they say you can earn flexible points that can be redeemed toward hundreds of hotels and airlines, perhaps a future rent payment, your next Lyft ride, and so much more.
--:-- Noel King: Your home isn't just where you sleep, it's your community, and Bilt wants you to go out and do things in the community.
--:-- Joe Palazzolo: You can eat at your favorite local restaurants, then earn more points.
--:-- Noel King: You can get VIP treatment at certain fitness studios.
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--:-- Noel King: When you're ready to travel, they say Bilt points can be converted to miles or hotel points all around the world.
--:-- Joe Palazzolo: You can earn points on rent and around your neighborhood wherever you call home by joining Bilt.com slash Explained.
--:-- Noel King: That's J-O-I-N-B-I-L-T dot com slash explained.
--:-- Andrew Hawkins: Yeah, it was a very atypical situation, I would say.
--:-- Noel King: This pay package was actually first approved in 2018.
--:-- Andrew Hawkins: At that time, Tesla was a much smaller company.
--:-- Noel King: It was just in the midst of producing its first major car, which was the Tesla Model 3.
--:-- Andrew Hawkins: There was a lot of problems with that production.
--:-- Noel King: The company announced it is temporarily shutting down production of the Model 3.
--:-- Andrew Hawkins: And this pay package was approved by shareholders, was devised by the company's board and approved by shareholders as a way to incentivize Elon Musk to take the company essentially to new heights.
--:-- Noel King: So it was tied to certain milestones.
--:-- Andrew Hawkins: And if Tesla's share price reached certain thresholds, if it increased in value and reached certain thresholds, then he would see these shares vested.
--:-- Noel King: Tesla commands attention. It's been on an incredible run.
--:-- Andrew Hawkins: And lo and behold, over the next few years, Tesla's share price skyrocketed.
--:-- Noel King: Tesla shares, they surged another 11% yesterday, closing at a record high and tacking on another, get this, $7.8 billion to the wealth of Elon Musk.
--:-- Andrew Hawkins: The Model 3 was a huge success.
--:-- Noel King: The Model Y came out soon afterward.
--:-- Andrew Hawkins: Everybody's favorite stock, Tesla, continues to gain steam after breaking above a trillion dollars in valuation.
--:-- Noel King: Shares up nearly 50% in just a month.
--:-- Andrew Hawkins: And Tesla, as a result, became the most valuable car company in the entire world.
--:-- Noel King: It's worth more than GM, Ford, Fiat Chrysler, and Honda combined.
--:-- Andrew Hawkins: That is amazing when you consider that Tesla may sell 500,000 vehicles this year.
--:-- Noel King: Toyota alone sells 10 million.
--:-- Andrew Hawkins: And so he met those thresholds.
--:-- Noel King: The pay package was vested, and he became $56 billion richer, essentially.
--:-- Andrew Hawkins: But then things sort of fell apart at that point.
--:-- Noel King: This mega payday prompted some noise from this man, Richard Tornetta.
--:-- Andrew Hawkins: A former heavy metal drama who owned just nine Tesla shares challenged the deal in a court in the state of Delaware.
--:-- Noel King: Almost immediately after this pay package was approved, a single shareholder, a man named Richard Tornetta, filed a lawsuit claiming that this pay package was too much.
--:-- Andrew Hawkins: He was being overcompensated.
--:-- Noel King: It was going to dilute the shares of all the rest of the shareholders.
--:-- Andrew Hawkins: $55 billion is such a large pay package that it basically skewed dramatically upward the entire data set for the compensation consulting industry.
--:-- Noel King: Not only that, but the way that it was formulated and created by the board was sort of an opaque process.
--:-- Andrew Hawkins: And shareholders sort of lacked insight into how that process unfolded.
--:-- Noel King: Look the bottom line is capital markets don't work if you don't tell stockholders material facts when asking them to take action.
--:-- Andrew Hawkins: And that exactly what happened here.
--:-- Noel King: Mr. Torinetta's case worked its way through the court system.
--:-- Andrew Hawkins: And then finally in January of this year a Delaware court judge ruled in favor of the shareholder and voided Elon Musk's pay package.
--:-- Noel King: Agreeing with the argument that the process was opaque and obscure and that shareholders lacked insight that the board was too buddy with Musk.
--:-- Andrew Hawkins: You know, his brother is on the board.
--:-- Noel King: One of his best friends is on the board.
--:-- Andrew Hawkins: And so that there was just too many flaws in this process.
--:-- Noel King: And therefore, this pay package was invalid.
--:-- Andrew Hawkins: OK, so the judge's critique is aimed at the board.
--:-- Noel King: How does the board address those concerns?
--:-- Andrew Hawkins: So it was pretty fascinating to watch over the last few months.
--:-- Noel King: Tesla's board and Elon Musk sort of came together and said that this ruling from the judge was ridiculous.
--:-- Andrew Hawkins: And that not only were they going to fight it, but they were essentially just going to go right back to shareholders and ask them again whether or not Elon Musk should receive this money.
--:-- Noel King: This is a public company. Let's use direct democracy, essentially, and prove to this court system and to this judge that the shareholders truly want Elon Musk to receive this massive pay package.
--:-- Andrew Hawkins: And it was an interesting strategy because if you think about it, the company sort of was gambling on the fact that if they went through the process again, but also took the entire lawsuit and the ruling from the judge and basically submitted it to the SEC and disclosed it all to shareholders, then shareholders would have then all of the information that the judge had claimed that they lacked in the first go around.
--:-- Noel King: And all of this came to a head at Tesla's annual shareholder meeting.
--:-- Andrew Hawkins: Welcome to Texas, the home of Tesla.
--:-- Noel King: Yeah, so the meeting opened up and it was sort of going through kind of like the very dry way in which public company shareholder meetings go forward.
--:-- Andrew Hawkins: This meeting is going to be in two parts.
--:-- Noel King: First, we're going to cover the 12 items that stockholders have been asked to vote on.
--:-- Andrew Hawkins: Many of the votes had already been cast at this point because Tesla shareholders had been given the opportunity to vote prior to the meeting.
--:-- Noel King: They went through, they read all of the proposals.
--:-- Andrew Hawkins: There were proposals that were supported by the board.
--:-- Noel King: And then, as is usually the case, there's a list of proposals proposed by various shareholders that are opposed by the board around things like transparency and sustainability.
--:-- Andrew Hawkins: Let's move on to the seventh stockholder proposal, which is an advisory vote regarding committing to a moratorium on sourcing minerals from deep sea mining.
--:-- Noel King: Our board is recommended against for the reasons set forth in the proxy.
--:-- Andrew Hawkins: After a few minutes of reading all these proposals and people sort of making the case for them, the voting was closed.
--:-- Noel King: Preliminary vote total came in and lo and behold, Elon Musk had yet again won his gigantic pay package from Tesla shareholders.
--:-- Andrew Hawkins: I just want to start off by saying, hot damn, I love you guys.
--:-- Andrew Hawkins: Which on some level makes sense because Elon Musk did what he promised to do for the business.
--:-- Noel King: On the other hand, you have the Wall Street Journal reporting on these inappropriate relationships with women.
--:-- Andrew Hawkins: And that's not Elon Musk's only problematic workplace behavior.
--:-- Noel King: When people talked about does this man deserve this money, did anyone say, well, yeah, he did his job.
--:-- Andrew Hawkins: We're profitable. He did great.
--:-- Noel King: But also, he's kind of a dick.
--:-- Andrew Hawkins: Maybe we shouldn't reward that.
--:-- Noel King: So I don't think those words were exactly used.
--:-- Andrew Hawkins: But, yes, it did come up several times.
--:-- Noel King: There were shareholders that were allowed to sort of make statements in support of their own proposals.
--:-- Andrew Hawkins: And during those statements, there were shareholders that sort of pierced the reality bubble that you may not normally hear these kind of things discussed amongst the Elon Musk faithful.
--:-- Noel King: Year after year, more harassment and discrimination allegations have emerged with few visible improvements in Tesla's people management policies or practices to assuage our concerns.
--:-- Andrew Hawkins: The Musk premium is already eroding.
--:-- Noel King: Tesla is Musk's liquid piggyback.
--:-- Andrew Hawkins: Bite the bullet. Prepare for a future that doesn't depend on a superhero dictatorship.
--:-- Noel King: So this vote was a referendum on his leadership at Tesla, but also at his other companies.
--:-- Andrew Hawkins: What are we to take away from the fact that he got exactly what he wanted?
--:-- Noel King: Well, I think what that means is that Elon Musk is going to be the CEO of Tesla for as far as we can tell for the years to come.
--:-- Andrew Hawkins: Musk is very much trying to sell this vision of Tesla as more than just your average car company, as being something that is on the vanguard of the development of artificial intelligence, much like all of these other companies like OpenAI and Google and Microsoft.
--:-- Noel King: And so if there are things that are going on behind the scenes, if he is sort of treating employees poorly, which has always been the case at Tesla for years, and people know this about them because they have been sued countless times for gender discrimination, for harassment, for racial discrimination.
--:-- Andrew Hawkins: There have been labor violations. There's just a litany of problems, even aside from Elon Musk and his own personal behavior.
--:-- Noel King: That have implicated the company in really horrendous things for many, many years.
--:-- Andrew Hawkins: And yet, because he is a very good salesman, he is very good at marketing himself and marketing sort of the mission of Tesla and sort of as being seen as this person who is capturing the zeitgeist of right now around technology and AI, that is why there is less accountability for him than I think might typically be the case at a public company like Tesla.
--:-- Noel King: Amanda Llewellyn worked on Sunday.
--:-- Amina El-Sadi: edited.
--:-- Patrick Boyd: and Andrea Kristen's daughter engineered.
--:-- Laura Bullard: fact-checked.
--:-- Noel King: I'm Noelle King. It's Today Explained.
