Overworked Musk spooks the market
ELON MUSK’S erratic behaviour was front and centre again last week as the CEO of Tesla conceded that he’s overwhelmed by job stress, pushing his electric car company’s stock down and bringing pressure on its board to take action.
Musk’s revelation, in a Thursday interview with The New York Times, came as government regulators are reportedly investigating whether his recent out-of-the-blue tweet about taking Tesla private violated disclosure requirements.
Now, experts say Tesla has reached an intersection where the board must decide the direction of its leadership. Among their suggestions: Remove Musk as CEO, permanently or via a temporary leave of absence, or appoint a No. 2 executive who could act as a steadying hand.
“It’s kind of bizarre,” said Charles Elson, director of the corporate governance centre at the University of Delaware. “It’s a drama we shouldn’t be watching.”
Tesla presents plenty of challenges for the top executive: It routinely loses money and is burning through cash as it ramps up development of its Model 3 sedan, a less-expensive electric car it hopes appeals to the mass market. A large number of investors known as shortsellers have bet against the company.
Musk has added to those pressures with lofty projections for profits and production that Tesla often fails live up to. Plus, the eccentric billionaire is the head of at least two other companies, including the rocket company Space X.
Musk admitted to the Times that the past year has been the most “difficult and painful” of his career. The newspaper reported that during an hour-long telephone interview on Thursday, an emotional Musk acknowledged that he was working up to 120 hours a week and sometimes takes Ambien to get to sleep.
Yet he said he has no plans to give up his dual role as Tesla’s chairman and CEO.
“If you have anyone who can do a better job, please let me know. They can have the job. Is there someone who can do the job better? They can have the reins right now,” he told the paper.
NO SIGN OF TAKING ACTION
Tesla’s board showed no sign of taking action on Friday. In a statement to The Associated Press, directors praised Musk’s leadership, saying he had put hundreds of thousands of popular cars on the road, created tens of thousands of jobs and created significant returns for shareholders. Musk was not involved in crafting the statement.
Shares of Tesla Inc. tumbled about 9 per cent, closing Friday at US$305.50, their lowest level since August 1. For the week, the company shares lost 14 per cent, or US$8.5 billion in market value.
Recent developments put board members in a difficult position because Musk, who entered Tesla as a major investor and built the company into a force that has changed the perception of electric cars, is the company’s public identity.
But Erik Gordon, a University of Michigan business and law professor, said the board has a duty to shareholders.
“If the board does not get him out of this slot at a minimum on a leave of absence basis, I think the board is going to be seen by a lot of people who love the company as being derelict in their duties,” Gordon said Friday.