Tesla executives can’t find someone ready to work under a self-proclaimed “nano-manager”.
The battle between Elon Musk, Tesla’s CEO, and the Securities and Exchange Commission (SEC), the main regulator of America’s stock market, is over.
The agency had filed a civil lawsuit against Musk on September 27th, alleging that he misled shareholders about his plan to take the firm private.
The Tesla boss tweeted: “Am considering taking Tesla private at $420. Funding secured.” The resulting surge in Tesla’s share price, and Musk’s oft-stated desire to “burn” the short sellers that have targeted his firm, stoked the SEC’s anger.
Its investigation revealed that Musk had indeed reached an oral agreement with a Middle Eastern investor, believed to be Saudi Arabia’s sovereign-wealth fund, to take the firm private but had not agreed on a specific price or got bankers involved to draft the paperwork.
Unimpressed, regulators asked the courts to ban the entrepreneur from serving as a director or senior officer of any public company.
The prospect of the visionary boss of the world’s leading electric-vehicle (EV) manufacturer being ousted from the firm he has lifted from obscurity to global prominence shocked investors, who began dumping their shares.
In the event, however, it turned out that the SEC was using this extreme threat to get a reluctant Musk to accept sensible reforms of corporate governance at Tesla, which by all accounts he has run with an iron fist.
Under a settlement that was announced on October 1, he cannot serve as chairman of the EV maker for three years. Tesla must also appoint two independent board directors.
The firm has also agreed to supervise Musk’s corporate communications, including his tweets. Tesla shares jumped once more on the news that Musk will remain as Chief Executive.
Although the US Department of Justice has started a criminal probe of the “funding secured” tweet, this would require proving criminal intent, a high bar. Some disgruntled investors have launched lawsuits.
The hope for shareholders is that a chairman overseeing Musk, along with a more independent board, will keep him focused on the job at hand.