“Securities and Exchange Commission officials were understandably taken aback on Thursday morning when Tesla’s board — and its chairman, Elon Musk — abruptly pulled out of a carefully crafted settlement,” James B. Stewart reports for The New York Times. “After the S.E.C. responded by accusing Mr. Musk, but not the company that he had co-founded, of securities fraud, the board further defied regulators, issuing a provocative statement saying that the directors were ‘fully confident in Elon, his integrity, and his leadership of the company.'”
“It was a stunning reversal: The board had rejected a settlement that was extraordinarily generous — it would have allowed Mr. Musk to remain as chief executive, and required him to step down as chairman for only two years. Now, the company was at risk of losing Mr. Musk as chairman and chief executive if regulators prevailed in court,” Stewart reports. “But Mr. Musk had given the board little choice: In a phone call with directors before their lawyers went back to federal regulators with a final decision, Mr. Musk threatened to resign on the spot if the board insisted that he and the company enter into the settlement. Not only that, he demanded the board publicly extol his integrity. On Saturday, the company and Mr. Musk finally agreed to settle the matter, ending a crisis that began with Mr. Musk’s now-infamous Twitter post saying that he had “funding secured” for a buyout at $420 a share.”
“Mr. Musk’s 48 hours of obstinance came at a significant price to him and the company. They had passed on Thursday’s generous offer, and the S.E.C. felt compelled to extract greater concessions. The ban on Mr. Musk’s serving as chairman went from two years to three, and his fine doubled to $20 million. Tesla will also pay a $20 million fine, and Mr. Musk agreed to personally buy the same amount in Tesla stock. The S.E.C. is also requiring the company to add two independent directors and to elect an independent director as chairman,” Stewart reports. “‘Rejecting such a favorable settlement is proof that he needs monitoring,’ said John C. Coffee Jr., a professor at Columbia Law School.”
Read more in the full article here.
MacDailyNews Take: Geez, the S.E.C.’s initial settlement offer was even more favorable to Tesla and all Musk seems to have extracted by rejecting it is not having to admit “wrongdoing.” For that, he got an extra year of being barred from chairmanship, another $10 million each added to his and Tesla’s fines, the addition of two independent directors, with an independent director as chairman.
Tough negotiator that Musk.
So, how soon ’til Elon threatens to lop off an ear? Or just does it for shits and giggles?
$40 million and loss of Chairmanship is an admission of wrongdoing, regardless of the legalese bullshit.
In other words: If Musk did nothing wrong, he’d still be Chairman, he and Tesla wouldn’t each be $20 million lighter in the wallet (not that they’ll notice), and the company wouldn’t be appointing two new independent directors and establishing a committee of independent board members.
Tweets can be mighty expensive. — MacDailyNews, September 29, 2018
Musk ousted as Tesla chairman, fined $40 million in SEC settlement over fraud charges; will remain CEO – September 29, 2018
U.S. SEC charges Tesla CEO Elon Musk with fraud – September 27, 2018
Tesla shares crash after Elon Musk smokes pot on live web show, exhibits other bizarre behavior – September 8, 2016
Apple hired scores of ex-Tesla employees this year, and not just for its car project – August 24, 2018
Tesla sinks on concerns over CEO Elon Musk’s erratic behavior – August 17, 2018
Doug Field, former Tesla engineering chief, returns to Apple – August 10, 2018