The return of the barons

On Thursday, Tesla shareholders approved a compensation package for Elon Musk potentially worth one trillion dollars over the next decade. Seventy-five per cent voted in favour. The company's European sales have collapsed between 40 and 78% across key markets. Chinese competitor BYD now outsells Tesla on the continent. The Model Y hasn't seen a major refresh in four years. Full Self-Driving, promised since 2015, still requires constant human supervision.

Standard corporate governance theory suggests this shouldn't be possible. When performance declines, boards should increase accountability, not hand out the largest compensation package in corporate history. Yet here we are.

Most analysis focuses on the absurd figure or Tesla's demonstrably captured board. But everyone is missing the structural pattern. This isn't an isolated governance failure. It's the most extreme example of a fundamental transformation in how modern capitalism allocates power and accountability.

The pattern across companies

Look beyond Tesla. The mechanism repeats with striking consistency across the most visible technology companies.

Meta has incinerated twenty-seven billion dollars on the metaverse whilst Mark Zuckerberg maintains absolute control through dual-class share structures. The board cannot remove him regardless of performance. OpenAI's board attempted to fire Sam Altman in November 2023 over concerns about his behaviour and decision-making. Within four days he returned with enhanced authority whilst the board that dismissed him was replaced. The entity designed to constrain him was eliminated. X has lost over forty billion in value since Musk's acquisition. He faces zero personal consequences whilst maintaining complete operational control.

The pattern extends beyond technology. Donald Trump converted political support into a business empire immune to normal accountability structures. His followers defend every decision tribally regardless of business fundamentals. The MAGA merchandise ecosystem functions identically to Tesla investor behaviour.

What these cases share isn't industry or geography. It's a specific structural architecture that I'll call the founder-celebrity control model. And it's systematically replacing the corporate governance frameworks built over the past century.

The five structural layers of capture

This model operates through five simultaneous mechanisms that reinforce each other into an essentially unfixable system.

Layer one: tribal identity economics. Investors and customers don't transact for financial return or product utility alone. They purchase membership in a visionary tribe. Tesla buyers aren't acquiring transportation: they're joining Musk's civilisation-transforming mission. This transforms criticism from rational analysis into apostasy. When proxy advisers Glass Lewis and ISS recommended voting against Musk's package, he called them "corporate terrorists" and his followers amplified the attack. The tribal base becomes a defensive moat against accountability.

Layer two: narrative valuation over fundamentals. Traditional metrics (price-to-earnings ratios, revenue growth, profit margins) become irrelevant. Valuation derives entirely from the story the founder tells. Tesla's fifteen hundred billion market capitalisation doesn't reflect the cars it manufactures today. It reflects the robots, autonomous vehicles, and energy revolution Musk promises tomorrow. This inverts normal corporate dynamics: declining current performance doesn't trigger accountability if the future narrative remains compelling. The board cannot challenge the compensation because doing so implicitly questions the narrative that justifies the valuation.

Layer three: retail investor mobs as protection. Traditional corporate governance assumed institutional investors would enforce discipline through informed analysis. The founder-celebrity model weaponises retail investors instead. When Tesla shareholders rejected recommendations from institutional advisers in June 2024 and re-elected directors that Delaware Court had found to lack independence, they demonstrated how mob dynamics override professional judgement. Small shareholders, individually powerless, collectively become the founder's praetorian guard.

Layer four: multi-company ecosystem leverage. The founder doesn't control one company: they control an interconnected empire. Musk simultaneously runs Tesla, SpaceX, X, xAI, Neuralink, and The Boring Company. Zuckerberg controls Meta, Instagram, and WhatsApp. Bezos built Amazon, AWS, and Blue Origin. This creates impossible board dynamics: threaten accountability at one company and the founder simply refocuses on others. "Fire me from Tesla? Fine, I'll spend more time on SpaceX and xAI." The board cannot call this bluff because market reaction to his departure would be catastrophic.

Layer five: political capture and regulatory immunity. These founders aren't merely business leaders: they wield direct political influence. Musk advises Trump, manages SpaceX government contracts, and holds security clearances. Zuckerberg testified before Congress whilst running a platform that shaped the 2024 election. Bezos's Washington Post and AWS contracts with intelligence agencies create entanglements that transcend market discipline. They've become too politically connected to constrain through normal regulatory channels.

The anatomy of board capture

The Delaware Court of Chancery's January 2024 ruling in Tornetta v. Musk provides clinical documentation of how this capture operates mechanically. Chancellor McCormick found that five of eight board members lacked independence from Musk despite formal compliance with NASDAQ listing standards.

The details are revealing. Board members owed their "generational wealth" to investments in Musk's private companies. The lead director and Musk "spent the night at each other's homes," "vacationed together with their families," and "spent Christmas together." Board chair Robyn Denholm received Tesla stock worth hundreds of millions (the majority of her total wealth) creating obvious dependency. Three directors held positions in SpaceX, intertwining their interests across Musk's empire.

This isn't corruption in the traditional sense. Nobody accepted cash in envelopes. It's structural capture through interwoven economic and social networks. Board members face a simple game theory calculation: Challenge Musk and risk his departure, stock collapse, and personal wealth destruction. Or approve his requests and maintain lucrative positions with access to one of the world's most valuable business networks.

The rational choice is obvious. The system doesn't require conscious malfeasance. The incentive architecture produces capture automatically.

The historical analogy: robber barons 2.0

The closest historical parallel isn't Enron's accounting fraud or WeWork's venture capital excess. It's the Robber Baron era of 1870 to 1920 when J.P. Morgan, John D. Rockefeller, and Andrew Carnegie controlled entire economic ecosystems.

The structural similarities are precise: Boards functioned as rubber stamps. These men accumulated massive political influence through direct relationships with presidents and senators. They operated across multiple interconnected industries. Morgan through banking, steel, and railroads; Rockefeller through oil, banking, and transport. They cultivated public personas as visionary builders of American civilisation. Their supporters defended them tribally against critics who they framed as anti-progress or anti-innovation.

The critical difference: back then it took federal government intervention during the Progressive Era to impose accountability. The Sherman Antitrust Act of 1890, strengthened enforcement after the Panic of 1907, and eventually the Great Depression forced structural reforms. It required economic collapse and political revolution to rein in concentrated power.

Today's challenge is potentially more intractable. The Robber Barons didn't have two hundred million Twitter followers who could be mobilised instantly against critics. They couldn't present themselves directly to retail investors without intermediary institutions. The tools of narrative control and tribal mobilisation are vastly more sophisticated now.

Why this is unfixable from within

Traditional corporate governance mechanisms assume boards can act independently when necessary. But every check has been neutralised.

The board is captured through the mechanisms documented above. Institutional investors are trapped: opposing the founder triggers the very stock collapse they're trying to prevent. Retail investors are tribal rather than rational. Regulators move slowly and face political pressure from the founder's allies. Proxy advisory firms get dismissed as "corporate terrorists" when they challenge decisions.

The compensation package approval reveals the impossibility clearly. Here's the clinical question that exposes the structural trap: You're on the Tesla board. You personally hold five hundred million in Tesla stock and owe your board position to investments in Musk's other ventures. Musk says if you vote against his package, he'll focus primarily on SpaceX and xAI. You know his departure would crash the stock thirty to fifty per cent, destroying your personal wealth whilst fulfilling your fiduciary duty achieves nothing because other board members will approve the package anyway.

What do you rationally do? You vote yes. The system produces this outcome regardless of any individual's integrity or intentions.

Probable trajectory and implications

Based on analogous historical patterns, three scenarios emerge over the next several years.

Scenario one: collapse and reform. A major crisis (sustained performance failure, regulatory action, or founder behaviour that's finally too extreme) triggers intervention. Like the Progressive Era reforms, new governance structures get imposed externally. Timeline: probably five to ten years, requiring genuine systemic crisis.

Scenario two: evolution and normalisation. The founder-celebrity model becomes the accepted standard for certain company types. Governance textbooks acknowledge it as an alternative structure rather than a failure. Investors price in the risk consciously. This is already partly happening with dual-class share structures.

Scenario three: fragmentation and decay. Individual founders age, die, or lose narrative control. Their companies struggle without them, demonstrating the fragility of personality-dependent structures. But no systemic reform occurs: each case is treated as individual failure rather than model collapse.

The most likely outcome combines elements of all three. Some companies will collapse spectacularly, forcing selective reforms. Others will transition successfully to post-founder management. The model itself will persist because the structural incentives that produce it remain intact.

Strategic implications for decision-makers

For institutional investors: Traditional activism won't work when boards are structurally captured and retail bases are tribal. The only leverage is credible exit threat, which requires coordination that's nearly impossible to achieve.

For board members considering positions at founder-led companies: Understand you're accepting a fundamentally different role. You won't be providing oversight in the traditional sense. You're joining a supporting cast, not a governance structure. Price your compensation accordingly.

For regulators: The existing frameworks assume boards can act independently and shareholders vote rationally. Both assumptions have been falsified. New structures will be necessary, probably emerging only after visible failures.

For founders building companies: You're watching a masterclass in power consolidation. Whether you view it as template or cautionary tale depends on your objectives.

The clinical question

The Tesla compensation package isn't an anomaly. It's the blueprint of an emerging model of corporate control that systematically disables every traditional accountability mechanism. The board is captured through economic and social networks. Shareholders are tribal rather than rational. Regulators are slow and politically compromised. The founder becomes effectively irremovable regardless of performance.

We're witnessing the end of modern corporate governance as constructed after Sarbanes-Oxley. And at the moment, none of the traditional accountability structures appears capable of stopping it.

History suggests it will take a systemic crisis to force correction. The Progressive Era required the Panic of 1907 and eventually the Great Depression before reforms could be imposed. Until a similar collapse forces intervention, we're living through the return of the barons. They just use different tools now.

Which brings us to the question every decision-maker should sit with: You're on the board. You personally hold five hundred million in Tesla stock and owe your position to investments in Musk's other ventures. Musk says if you vote against his package, he'll focus primarily on SpaceX and xAI. You know his departure would crash the stock thirty to fifty per cent, destroying your personal wealth whilst fulfilling your fiduciary duty achieves nothing because other board members will approve the package anyway.

What do you rationally do?

The honest answer reveals why this system is unfixable from within.