Tesla board torn between service to shareholders, CEO

Bloomberg

Tesla Inc.’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 percent, the largest drop in nearly two years. The references to Ambien use and driving while tweeting are fueling 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.”
But at Musk’s companies, it’s largely business as usual. Tesla workers at the Fremont, California, assembly plant said they are focussed 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.
The four astronauts who are counting on Space Exploration Technologies Corp. to safely ferry them to and from the International Space Station spent time at the company’s Hawthorne, California, headquarters with employees. Chief Operating Officer Gwynne Shotwell presided over the event, which Musk didn’t attend, at least while journalists were present.
Musk is also the founder of the infrastructure startup the Boring Co. and Neuralink, which is developing brain-machine interfaces to connect humans and computers.

Growing Complexity
The Tesla board’s job has become increasingly complex this month. Three directors announced they had formed a special committee to evaluate the not-yet-seen details of Musk’s go-private plan. The proposal appears tenuous, with one analyst putting the chance at less than 50 percent.
The committee has yet to announce which bank they have retained to act as a financial adviser.
A Securities and Exchange Commission probe into Musk’s tweet and other company statements is intensifying, with a subpoena already issued.
Unlike SpaceX, Tesla doesn’t have a chief operating officer or clear No. 2 in place.
Musk told the New York Times he has no plans to give up his dual roles as chairman and CEO but also said that “if you have anyone who can do a better job, please let me know. Is there someone who can do the job better? They can have the reins right now.”
Tesla’s communications team — which has spoken in turn on behalf of the company, the board and Musk himself — didn’t immediately comment on the Times story, the board’s activities or whether the company is actively looking for a COO.
Tesla board members didn’t respond to several requests for comment; they often forward journalists’ inquiries to Tesla’s communications team.
The board of directors is on the lookout for senior talent but is not actively searching for a COO, a person familiar with the board’s thinking said.