Elon Musk, the CEO of Tesla Inc. and SpaceX, is strongly against the concept of passing down wealth to undeserving children.
"I am definitely not of the school of automatically giving my kids some shares of the companies, even if they have no interest or inclination or ability to manage the company," he said. "I think that's a mistake."
According to Musk, executives should refrain from transferring their shares to offspring who lack the interest or ability to effectively manage the companies.
Instead, Musk advocates for a merit-based approach, suggesting that it is wiser to hand over leadership to deserving individuals within the organization rather than simply bestowing shares upon heirs who may lack genuine passion for the business. Musk's perspective on empowering capable individuals rather than relying solely on inheritance resonates as a sensible approach.
During an interview at The Wall Street Journal's CEO Council, the billionaire CEO revealed that he has already identified competent successors who could take over his companies if necessary. He strongly opposes the idea of executives passing on their businesses or voting shares to their children without considering their qualifications. Musk believes in meritocracy and argues that leadership positions should be earned based on individual competence rather than relying solely on family ties or inheritance.
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Musk has distinct relationships with each of his 10 children. While he often includes his 3-year-old son X AE A-XII in public events and even granted him a special Twitter badge, not all of his children share the same level of closeness with him. His eldest daughter recently expressed her desire to change her name, indicating her intention to create some distance between herself and her father as well as the associated public image. The complex dynamics within Musk's family highlight the uniqueness and individual connections that exist between parent and child.
The topic of whether billionaires should involve their children in their business empires has long been a subject of debate. While some, like Apple Inc. Co-Founder Steve Jobs chose not to pass down their wealth to their offspring, others have welcomed their family members into their enterprises, leading to familial power struggles reminiscent of the TV show "Succession."
As the owner of five companies including Tesla and Twitter Inc., Musk acknowledges the challenge of succession planning, describing it as a perennial issue. He has communicated his preferences to the board members of his companies regarding potential successors for his executive positions in case of unforeseen circumstances.
Musk has also expressed concerns about the succession of his shares in his companies and has been grappling with potential solutions. One idea he has considered is the establishment of an "educational institution" that would have control over his voting shares.
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Recent rumors suggested that Musk was searching for a new CEO for Tesla, but he dispelled those speculations during Tesla's annual meeting. While there have been previous mentions of potential successors for Tesla, such as the Chief Financial Officer Zach Kirkhorn or the carmaker's chief in China Tom Zhu, Musk has not disclosed any specific details about the people he has in mind.
The succession plan for Musk's companies, especially Tesla, has attracted attention since he decided to take Twitter private. Concerns were raised about Musk's focus and dedication, prompting some Tesla investors to call for more oversight. With the recent appointment of a new CEO for Twitter, analysts predict that Musk will now have the opportunity to concentrate on his other ventures, often referred to as his "golden child" companies.
Investing in Startups
Musk owns hundreds of millions of shares in Tesla worth billions of dollars. The billionaire also owns substantial stakes in a number of other companies like SpaceX, The Boring Company and Neuralink. This is because he either founded the company or invested in them as a startup at the earliest stages. Thanks to changes in federal law, anyone can invest like Elon Musk and own stakes in high-growth startups. Platforms like StartEngine and Wefunder let anyone invest in top startups, including owning a stake in StartEngine itself.
See more on startup investing from Benzinga.
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