Tesla And An Era of Closer Musk Oversight
The new year began and for Tesla Inc, it brings a new age in for the company and for the Tesla Inc.’s board and of course Elon Musk.
The reason being for this new era is due to the fact that the deadline with the Securities and Exchange Commission set for Tesla, the electric-car maker to add two new independent directors to the board. Also requires was for them to take a series of steps to create more reliable checks to its volatile chief executive officer’s presence on social media, meaning Musk’s Twitter feed!
These measures were to include setting up a board committee and employing also a specialist Lawyer who’s expertise is in securities, He or She would be responsible for overseeing the governing senior executives’ tweets and posts on other Social Media platforms that are material to the company.
In September Musks Social Media messages ended up with a Lawsuit for Tesla. Now Musk’s communications, in particular, his Social Media posts are required to be more closely scrutinized under the agreement that Tesla reached in the recent Lawsuit in September in order to settle it. The lawsuit was over Musks tweets must now keep the company matters private.
The carmaking Company has already complied with the Securities and Exchange Commission order to name a new chairman by tapping existing director Robyn Denholm to take over from Musk in November 2018
The Securities and Exchange Commission acted to punish Tesla and Musk because it alleged he committed fraud by announcing through a tweet that he had already secured funding in order to take the company private at $420 a share.
The agency said this and other claims the Musk had made on Aug 7th, 2018 were false and also misleading. The announcement also impacted Tesla’s stock, which closed that day at $379.57 per share which was just short of a record.
The Tesla shares sold within days after the Lawsuit where they plunged to $264.77 per Share by Sept 28th, 2018. This lead to the day after the Securities and Exchange Commission sued Musk and went on to raise the prospect of banning Musk from being CEO, Musk and Tesla settled the day after.
During the 90 days that the Securities and Exchange Commission gave Tesla to implement procedures and controls to oversee Musk’s communications, He publicly lambasted the agency and raised the notion that he would change his Twitter habits or be reined in by the Tesla board.
In an interview with “60 Minutes” Musk explained that “He didn’t respect the agency and that no one was reviewing his posts before he sent them.”
He went on to tell correspondent Lesley Stahl after she asked him “how Tesla would know if his tweets would move the market if they weren’t being read beforehand,” Musk replied: “Well, I guess we might make some mistakes. Who knows?” He then added: “Nobody’s perfect.”
Musk also said he believes that it was “unrealistic” that Denholm would watch over him, pointing out that he is, in fact, Tesla’s largest shareholder.
In October, Musk wrote that the tweets had cost him a $20 million penalty that was paid to the Securities and Exchange Commission and that the fine was “worth it.”
After Five days of the settlement being reached, Musk referred to the Securities and Exchange Commission as the “Shortseller Enrichment Commission” and wrote that it was “doing incredible work.”
Tesla’s new independent directors will join a board although, the board has long been criticized over its poor governance.
Recently, for example, a union-affiliated investor group and officials representing major pension funds in four U.S. states sent a letter to board members pointing out that 5 of the 8 non-executive directors on Tesla’s board had professional or personal ties to Musk.
The investors urged the Tesla board to go beyond the terms of the Securities and Exchange Commission settlement by setting timelines for certain directors to leave, among other measures suggested.
Shaking It Up
Since the run-in with the Securities and Exchange Commission, Tesla’s legal department has been going through shakeups.
The company approached Dane Butswinkas who is the Washington trial lawyer who represented the Securities and Exchange Commission in his legal battle with the agency, earlier this month to become Tesla’s general counsel. He will be replacing Todd Maron, who will be leaving Tesla in January 2019, He has been with the company for five years. Prior to his appointment with Tesla he represented Musk through two divorces.
In November 2018 Phil Rothenberg, who was a vice president in Tesla’s legal department, left his post to become general counsel at Sonder.
For all the outcries over Musk’s Social Media Posts, one lawyer representing Musk in a defamation lawsuit brought by a cave explorer he called a pedophile in July after a boys football team became trapped in a cave, The Lawyer is downplaying the seriousness of how the public takes some of Musk’s posts.
The Vernon Unsworth the Person receiving the insult took it seriously! he Sued!
In a motion to dismiss the lawsuit that was filed, Musk’s lawyer said his
“client’s insults weren’t intended to be statements of fact but were made in the middle of a schoolyard spat on social media.”
He went on to defend Musk by saying
“No one would reasonably believe he had private knowledge that the British cave explorer, Vernon Unsworth, was attracted to children or engaged in sexual activity with them,”
Regardless if these were just comments in Social Media, one should never throw around certain assumptions especially when you are in such a public arena and also someone who is in the media’s eye.
There are young people all around the world who are fans of Elon Musk and who are Car enthusiasts and space Enthusiasts who look up to him. NOt every kid’s hero is a sports star!