Musk tests governance limits by having children with aide

Elon Musk’s decision to have children with one of his top executives at Neuralink exceeded the bounds of corporate governance norms, according to nine corporate governance experts who gave differing interpretations of the company’s code of conduct for employees.

Best known for his electric car factory Tesla and rocket builder SpaceX, Musk is also the chief executive of Neuralink, a company with about 300 employees that seeks to develop chips to connect the human brain directly to machines.

Musk and Shivon Zilis, one of his direct reports at the company, had twin babies last November, Insider reported July 6, citing a confidential court case.

Zilis, 36, has since told some of her colleagues that she was not romantically involved with Musk, 51, and conceived her children with him through in vitro fertilization (IVF), according to five people briefed on the case. Reuters was unable to establish the accuracy of Zilis’ account.

Zilis and spokespeople for Musk and Neuralink did not respond to requests for comment.

Relationships between supervisors and subordinates are frowned upon in companies and have already cost some CEOs their jobs, as they violate most corporate policies and raise concerns about conflicts of interest, corporate governance experts said.

Neuralink’s 62-page employee handbook, a copy of which was seen by Reuters, prohibits dating, “personal relationships” and “close personal friendships” between employees who have a direct supervisory relationship to avoid conflicts of interest.

But the facts presented by Musk and Zilis’ relationship are so unusual that corporate governance experts who reviewed the policy for Reuters expressed mixed views on whether the businessman broke the rules by having children by IVF with his subordinate.

“Whoever the lawyer who wrote this text did not contemplate this situation,” said Nell Minow, vice president of corporate governance consultancy ValueEdge Advisors, referring to Neuralink’s code of conduct.

She added that the situation appeared to “fall between the loopholes” of the manual’s intent to avoid conflicts of interest in employee relationships.

Neuralink’s code of conduct requires that relationships that could create a conflict of interest be disclosed to the company’s “personnel operations manager” so that he or she can decide whether to take steps to eliminate any conflict.

Reuters was unable to find out whether Musk or Zilis had disclosed the relationship to Kristy Hilands, the personnel operations manager. Hilands did not respond to requests for comment.

Neuralink accepted Zilis’ description of a non-romantic relationship, and she continues in her role as director of operations and special projects, said a source familiar with the company’s handling of the matter. In the weeks since their children’s disclosure, Musk and Zilis have also continued to work together, leading internal and external company meetings, according to two people with direct knowledge of the matter.

For example, after learning in recent weeks that competitor Synchron had beaten Neuralink in a human trial in the United States, Musk sent Zilis to approach the company’s CEO, Thomas Oxley, and arrange a meeting, according to three sources familiar with the Subject. Zilis and Musk spoke with Oxley shortly afterwards about a possible investment by Musk in Synchron, the sources said.

open to interpretation

Four of the corporate governance experts said they believed Zilis having children with Musk through IVF should be interpreted as a “personal relationship” or “intimate friendship” under Neuralink’s code of conduct. The code defines a personal relationship as one in which individuals have an “ongoing relationship of a romantic or intimate nature and who are not married to each other”. It does not define an intimate friendship.

“You’re putting close family ties over professional relationships,” said Gabriel Rauterberg, a professor of corporate law at the University of Michigan. “There is always a concern that someone with greater power will use their professional power in inappropriate ways.”

The other five corporate governance experts interviewed by Reuters did not think the Musk and Zilis deal was a violation of Neuralink policy, or were unable to reach a definitive conclusion.

Usha Rodrigues, a professor at the University of Georgia law school, said Musk and Zilis’ situation “may fall under ‘close friendship’ if there is an ongoing coparenting-type relationship, but that is subject to interpretation.”

The extent of Musk’s involvement in his children’s lives with Zilis could not be ascertained by Reuters. The court case published by Insider shows that in April they asked the children to adopt the last name Musk. Musk and Zilis also listed the same Texas address.

Joan Heminway, a professor of management at the University of Tennessee Law School, said it’s not easy to prove that Musk and Zilis are close in person, even if they had IVF together. “That’s the detail here,” she said.

Translated by Luiz Roberto M. Gonçalves