Post by icemandios on Aug 15, 2018 13:32:30 GMT
Tesla's Board Throws Elon Musk Under The Bus
Profile picture for user Tyler Durden
by Tyler Durden
Wed, 08/15/2018 - 08:10
One of the key questions to emerge from Elon Musk's going private "funding secured" fiasco, is where was the board before, during and after the series of torrid tweets sent out by the Tesla CEO in the past two weeks. In an overnight NYT article, we finally get a fairly clear picture of what was going on through the heads of the company's board of directors, and it's not pretty.
While we urge readers to skim the full piece here, below are some of the key soundbites in what appears to be the first step in the board throwing Musk under the bus as defense against a potentially destructive SEC probe that could have vast implications not only for the CEO, but the company in general.
First, it appears that a big rift has emerged between Musk and the Board, to wit: "Members of Tesla’s board are scrambling to control a chief executive who some directors think is out of control."
The key issue: the same one that was brought up by a key Tesla investor over a month ago, with no success: getting Musk to shut up.
But more concerning for Musk is that the Board, which previously endorsed Musk's confusing narrative of events with a brief statement that effectively confirmed what we now know never happened, namely that the funding was never "secured", is now building a firewall from the CEO's increasingly toxic tweets:
Some of the especially colorful words that emerge from the report: "alarmed", "blindsided", "erratic":
A discussion of what Musk knew when only solidifies the case that Musk's only intention was to burn the shorts:
The NYT then focuses on the composition of the "independent" board, highlighting that it is anything but, which will be an issue as part of the company's attempts to take itself private.
Meanwhile, as Musk's erratic behavior has stunned investors, the board has similarly been shocked by how Musk forced it to do damage control for him.
Board members’ frustrations have intensified in recent days.
Which brings up a bigger question: just how loose is board oversight of its CEO, and why did it take an SEC probe into the company to force directors to start taking the company's current problems seriously? Or does the board know something investors don't, and is "scrambling" to take measures to distance itself from its wayward CEO?
For the answer keep an eye on Musk's tweeting, which as we noted recently has spiked exponentially in recent months, in what appears to be a desperate diversion from "something else."
Judging by the board's response, that "something" could be far more damaging to the company than anything revealed so far.
The full NYT article can be read here.
Profile picture for user Tyler Durden
by Tyler Durden
Wed, 08/15/2018 - 08:10
One of the key questions to emerge from Elon Musk's going private "funding secured" fiasco, is where was the board before, during and after the series of torrid tweets sent out by the Tesla CEO in the past two weeks. In an overnight NYT article, we finally get a fairly clear picture of what was going on through the heads of the company's board of directors, and it's not pretty.
While we urge readers to skim the full piece here, below are some of the key soundbites in what appears to be the first step in the board throwing Musk under the bus as defense against a potentially destructive SEC probe that could have vast implications not only for the CEO, but the company in general.
First, it appears that a big rift has emerged between Musk and the Board, to wit: "Members of Tesla’s board are scrambling to control a chief executive who some directors think is out of control."
The key issue: the same one that was brought up by a key Tesla investor over a month ago, with no success: getting Musk to shut up.
In recent days, according to people familiar with the matter, some of his fellow board members delivered a stern message: Stop tweeting.
Mr. Musk hasn’t heeded that advice. He has continued to post messages on Twitter, publicly plotting the company’s strategy and in some cases making assertions of dubious accuracy. That has only added to the chaos engulfing the struggling company.
Mr. Musk hasn’t heeded that advice. He has continued to post messages on Twitter, publicly plotting the company’s strategy and in some cases making assertions of dubious accuracy. That has only added to the chaos engulfing the struggling company.
But more concerning for Musk is that the Board, which previously endorsed Musk's confusing narrative of events with a brief statement that effectively confirmed what we now know never happened, namely that the funding was never "secured", is now building a firewall from the CEO's increasingly toxic tweets:
Tesla’s board members are also racing to inoculate themselves from the possible fallout from Mr. Musk’s public statements.
While it’s standard for boards to retain lawyers to counsel them on complicated matters, Tesla’s outside directors have hired two law firms to represent them.
While it’s standard for boards to retain lawyers to counsel them on complicated matters, Tesla’s outside directors have hired two law firms to represent them.
Some of the especially colorful words that emerge from the report: "alarmed", "blindsided", "erratic":
Some members of the board have grown alarmed by what they see as Mr. Musk’s erratic behavior, according to three people familiar with some directors’ thinking. Directors were blindsided last week when Mr. Musk claimed on Twitter that he had “funding secured” for a possible deal to convert Tesla from a publicly traded company into a private one. Such a transaction would most likely cost well over $10 billion.
A discussion of what Musk knew when only solidifies the case that Musk's only intention was to burn the shorts:
Musk said this week that he has been in talks with Saudi Arabia’s main government investment fund about possibly working on a deal to take Tesla private. But there were no indications that Mr. Musk has actually nailed down any commitments to bankroll such a transaction, and the Securities and Exchange Commission last week contacted the company about Mr. Musk’s Twitter posts, which drove up the company’s shares and prompted a halt in trading.
The NYT then focuses on the composition of the "independent" board, highlighting that it is anything but, which will be an issue as part of the company's attempts to take itself private.
One independent director’s personal relationship was deemed too close for him to sit on a committee the board established to evaluate Mr. Musk’s potential going-private transaction, according to two people familiar with the matter. As a result, that key committee only has three members.
Meanwhile, as Musk's erratic behavior has stunned investors, the board has similarly been shocked by how Musk forced it to do damage control for him.
“The issues facing Tesla relate to a lack of operational maturity,” said Roger McNamee, a Silver Lake founder who is now a managing director of the private-equity firm Elevation Partners. “The market has been remarkably patient as Tesla struggles to scale its manufacturing.” That patience has been tested by Mr. Musk in recent months. He has publicly disparaged financial analysts and insulted a cave diver who was helping rescue members of a Thai soccer team.
Board members’ frustrations have intensified in recent days.
Directors were upset that Mr. Musk’s tweets forced them to rush out a public statement explaining a transaction that was at an embryonic stage, according to people familiar with the thinking of board members.
So where would the growing feud between the board and Musk get resolved? Apparently, on twitter, where Musk's behavior will determine if he is paying attention or courting disaster:
Multiple directors have recently told Mr. Musk that he should stop using Twitter, with one urging him to stick to building cars and launching rockets, according to people familiar with the board’s communications. Tesla employees, including the company’s public-relations staff, have echoed that point, another person said.
So where would the growing feud between the board and Musk get resolved? Apparently, on twitter, where Musk's behavior will determine if he is paying attention or courting disaster:
Multiple directors have recently told Mr. Musk that he should stop using Twitter, with one urging him to stick to building cars and launching rockets, according to people familiar with the board’s communications. Tesla employees, including the company’s public-relations staff, have echoed that point, another person said.
Which brings up a bigger question: just how loose is board oversight of its CEO, and why did it take an SEC probe into the company to force directors to start taking the company's current problems seriously? Or does the board know something investors don't, and is "scrambling" to take measures to distance itself from its wayward CEO?
For the answer keep an eye on Musk's tweeting, which as we noted recently has spiked exponentially in recent months, in what appears to be a desperate diversion from "something else."
Judging by the board's response, that "something" could be far more damaging to the company than anything revealed so far.
The full NYT article can be read here.