TESLA BOARD TORN BETWEEN SERVICE TO SHAREHOLDERS & CEO
Tesla’s board of directors is at a critical juncture, wedged between a larger-than-life figure to whom many are personally close and their larger responsibility to shareholders.
Elon Musk’s astonishing interview with the New York Times has heightened concerns surrounding the health of Tesla’s chairman and chief executive officer, with shares plunging 8.9 per cent Friday, the largest drop in nearly two years. The references to Ambien use and driving while tweeting are fuelling calls for Tesla’s board to step up its oversight of the company’s CEO and largest shareholder.
“If the board is going to take any initiative, they will clamp him down,” said Maryann Keller, an independent auto industry analyst in Stamford, Connecticut. “He isn’t doing the stock or the perception of him as a leader any good.”
Musk told the Times he didn’t recall communications from the board and that he “definitely did not get calls from irate directors” after his August 7 tweet that he had “funding secured” to go private. He later amended the comment through a spokeswoman, saying lead independent director Antonio Gracias had contacted him about the August 7 tweet. Musk agreed not to tweet again on the possible transaction without discussing it with the board, the spokeswoman said.
Among the challenges of supervising a peripatetic entrepreneur is that running Tesla isn’t his only job. He is also chairman and CEO of innovative rocket manufacturer SpaceX and has created two other entities that add to demands on his time.
“It’s clear that Musk cannot continue to run four companies at a time,” said Stephen Diamond, an associate professor of law at Santa Clara University who specialises in corporate governance. “Tesla needs and deserves a full-time, exclusive CEO. But the first
question the board needs to clarify is this: Is Tesla for sale, or not? If they are going to entertain this go-private idea of Musk’s, they are obligated to get the highest share price possible.”
This week, that hasn’t been the case. After the stock soared to a record intraday high of $387.46 on August 7, it’s had its worst week since 2016, ending at $305.50.
But at Musk’s companies, it’s largely business as usual. Tesla workers at the Fremont, California, assembly plant said they are focused on making cars, but they do have questions about how the go-private idea will affect the stock options that constitute a sizeable chunk of their compensation.