Friday 20 September 2019

Tesla names two independent board members after Musk tweet row

Oracle founder Larry Ellison and Kathleen Wilson-Thompson have joined the board.

Elon Musk got into trouble with US regulators over a tweet (Robyn Beck/AP)
Elon Musk got into trouble with US regulators over a tweet (Robyn Beck/AP)

By Associated Press Reporter

Tesla has named two independent board members as part of a settlement with US regulators who demanded more oversight of chief executive Elon Musk.

Oracle founder Larry Ellison and Kathleen Wilson-Thompson, an executive vice president at Walgreens Boots Alliance, join the board as independent directors.

Mr Musk got into trouble with the Securities and Exchange Commission (SEC) in early August when he said in a tweet that he had “funding secured” to take the electric car company private.

The SEC accused Mr Musk of committing securities fraud, saying that the funding had not been secured and that he had duped investors who drove shares of Tesla up by 11% on the day of the tweet. Several weeks later, Mr Musk said the go-private deal was off.

Regulators initially wanted to force Mr Musk out of his job as CEO, but agreed to accept $20 million in penalties from both Mr Musk and Tesla. He agree to step down as chairman for at least three years, but acknowledged no wrong-doing.

Despite the agreement, Mr Musk has continued to clash with regulators.

Just days after settling the case, Mr Musk taunted the government via Twitter, referring to the SEC as the “Shortseller Enrichment Commission”.

Mr Musk has had a long-running feud with short sellers, a category of investors that have bet that the price of Tesla stock will fall.

So far, Mr Musk is winning that fight. Shares of Tesla are up more than 20% since his clash with the SEC.

Tesla named Australian telecommunications executive Robyn Denholm as board chairwoman last month as part of its agreement with the SEC.

Although Ms Denholm brings much-needed financial and auto industry expertise to Tesla – which has struggled to produce cars and make money – there has not been a marked change in Mr Musk’s unorthodox behaviour, at least compared with other chief executives at major corporations.

Tesla shares slumped 6% in early September after Mr Musk was seen appearing to smoke marijuana during an interview that made the rounds on YouTube.

Earlier this month, Mr Musk also dismissed the idea that Ms Denholm could exert control over his behaviour, saying that “it’s not realistic in the sense that I am the largest shareholder in the company”.

The SEC settlement also requires the company to vet Mr Musk’s tweets and other comments about the company before they are released to the public.

Mr Musk also shrugged off that provision, saying none of his tweets have been censored so far and the company does not review his posts to determine beforehand whether they could potentially affect the company’s stock price.

Still, in an SEC filing on Friday, Tesla said that it “intends to certify to the Commission that it and Elon have timely completed each of their respective actions required pursuant to the Settlement”.

PA Media

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