Tesla CEO Elon Musk will soon be gone as company’s chairman, but a replacement — someone who’ll need to occupy the position for three years — has yet to be named.
The hourglass was flipped after U.S. District Judge Alison Nathan approved a settlement between Musk and his company and the U.S. Securities and Exchange Commission Tuesday. Musk has 45 days to step down as chairman. Double the amount of time is allowed for the automaker to name two independent board members, though Musk and Co. only have two weeks to pony up their $20 million fines.
The settlement, which stayed on track despite Musk’s attempt to screw the whole thing up, contains a punishment perhaps far greater than those listed already: Musk now requires a Twitter parent.
Yes, the social media portal that got him in deep trouble with the SEC and sparked a stock price plunge is being reined in, at least on Musk’s end. A company lawyer will have to oversee all Musk communications, including tweets. If it looks like a message sent into the social media ether might exert some sort of force on Tesla’s stock, that lawyer has the ability to say, “No, go to bed.”
While it was his declaration of “funding secured” (for his August go-private bid) that landed Musk in the crosshairs of the securities regulator, numerous other non-financial tweets have all served to depress the company’s share value. This issue became more, ahem, pronounced over the past few months. Regardless, word of the settlement’s approval clearly pleased investors and analysts; as of publication time, the stock’s up 6.2 percent in Tuesday trading.
As we’ve gone over the downright odd chain of events that precipitated this settlement before, there’s no need to cover every inch of past ground. Essentially, the 11th hour settlement kept Musk at the helm of Tesla and made an SEC fraud lawsuit disappear, but shortened the chief executive’s leash.
Between the August 7th (fateful tweet day) and now, Tesla’s market value shrunk from $65 billion to $46 billion.
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