Elon Musk’s Relationship With Employee May Have Violated Tesla’s Ethics Code, Experts Say

Tesla CEO Elon Musk has tacitly acknowledged having a romantic relationship with a subordinate employee, conduct that led to forced departures for at least three other high-profile chief executives in recent years and which may have violated Tesla’s own code of conduct, experts say.

Musk silently welcomed twins last November with Shivon Zilis, according to court records obtained by Business Insider. Zilis is currently the director of operations and special projects at Neuralink, which was cofounded by Musk in 2016. Before Neuralink, Zilis also spent two years at Tesla as a project director. “Doing my best to help the underpopulation crisis,” Musk tweeted Thursday, following a report that he had twins from his relationship with Zilis.

From 2017 to August 2019, Zilis was an employee at Tesla. Although it’s not clear when Musk and Zilis began their romantic relationship, if it started while Zilis was at Tesla, it “would be a gross violation” of Tesla’s code of business ethics, says Jeffrey Sonnenfield, senior dean of leadership studies at Yale University.

The Tesla code doesn’t directly prohibit relationships with executives and subordinate employees, but it does call for employees to “avoid conflicts of interest” – with “supervising a relative, spouse, or romantic partner” cited as a specific example. The code directs employees to disclose relationships to an HR representative to determine if a conflict exists. Musk and Zilis didn’t immediately respond to emails asking whether they’d notified Tesla and Neuralink HR departments about their relationship. Tesla and Neuralink also did not respond to inquiries.

Even if Musk’s and Zilis’ relationship didn’t begin until she started working at Neuralink, the relationship may still violate Tesla’s code, since the actions of Tesla’s highly-visible CEO reflect on his company, says Julie Moore, an employment lawyer at Employment Practices Group. Sonnenfeld adds that while Neuralink doesn’t appear to have any policy against Musk having a relationship with an employee, the affair represents “poor judgment in management conduct.”

The revelation of Musk’s relationship with Zilis comes at a time when he’s increasingly under scrutiny for his behavior. Business Insider recently reported that in 2018, SpaceX paid $250,000 to settle sexual harassment allegations against Elon Musk made by a flight attendant who refused Musk’s sexual advances. Musk dismissed the report as a “politically motivated hit piece.” Last month, SpaceX employees circulated an open letter internally, condemning the CEO’s behavior on Twitter, according to The Verge.

Employment practices experts recommend that companies have policies on consensual relationships because, they say, such relationships can impact morale and professionalism in the corporate culture. According to a survey conducted by executive coaching firm Challenger, Gray & Christmas, 78% of companies have formal policies on consensual relationships that discourage them between a manager and an employee.

That number had increased from 70% in the wake of the #MeToo movement, which brought to light a number of high-profile incidents of sexual harassment after allegations were made against film producer Harvey Weinstein. Since that time, some high-profile CEOs of major public companies have paid a heavy price for engaging in relationships with subordinate employees and violating their own companies’ policies.

For example, former McDonald’s CEO Steve Easterbrook was fired in November of 2019 after engaging in sexual relationships with at least three subordinate employees. In 2018, former Intel CEO Brian Krzanich was forced to resign after an internal investigation found that he had a consensual relationship with an employee. Earlier this year, CNN CEO Jeffrey Zucker resigned because he’d failed to disclose a relationship with a colleague. In June, Vince McMahon voluntarily stepped down from his role as chairman and CEO of WWE pending an investigation into an alleged affair with an employee.

Given that the Tesla policy doesn’t explicitly ban consensual relationships, instead focusing on conflicts of interest, it’s hard to tell what, if any, action Tesla’s board of directors might consider. “I am betting that the board members are huddling with their inside counsel, outside employment attorneys, their PR people and they don't want to rush to judgment,” Moore says.

That said, Moore adds, lack of action by the boards of either Neuralink or Tesla might send a message to other CEOs that accountability for such relationships is waning.“Admittedly, in court documents, he's the father of two children,” she says. “The mother was the executive at the company at the time. So do the rules apply to him? Is he allowed to act with impunity because of his wealth, his power, his status, his notoriety?”

Charles Elson, a corporate governance expert at the University of Delaware, says that given recent history involving Musk’s high-profile feuds with securities regulators, board action against Musk is unlikely. “If the board didn't react to an SEC violation of a magnitude that resulted in a court order, I would be rather surprised that they did anything now,” Elson tells Forbes. “He is king and as the old joke goes, the king can do no wrong.”

Additional reporting by Alan Ohnsman

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