Musk Steps Down, Tesla Appoints Two New Directors As Part of SEC Settlement

To close out the final week of the year, Tesla announced two new additions to its board of directors.  Tesla says they will bring Kathleen Wilson-Thompson, formerly of Kellogg’s, and Oracle co-founder (and Oracle CTO) Larry Ellison.  These two new bigwigs join Tesla’s board as the innovative automotive technology company and its owner/founder, Elon Musk, move to settle a pending United States Securities and Exchange Commission (SEC) investigation. The issue in question is a single Tweet, from Musk about potentially taking Tesla private.  

Among other things, then, the settlement required the electric car company to bring on a new pair of independent directors. 

In a statement, Tesla’s Board of Directors note they conducted a broad search, over the course of a few months, in order to “add independent directors with skills that would complement the current board’s experience.”  By selecting Ellison and Wilson-Thompson, the company says they bring on a “preeminent entrepreneur and a human resources leader” commenting that they both have a passion to invest and develop sustainable energy.

Of course, it is important to recognize that Ellison—who describes himself as a “very close friend” of Musk—owns 3 million shares of Tesla stock.  In light of this, he has widely defended Tesla’s founder and CEO during this particularly trying and dramatic time in the company’s history, particularly online. However, it appears the company is now trying to downplay this relationship, likely because of the SEC’s “independent” clause in its stipulations for appointing two new directors. 

At the end of the day, though, Tesla and Musk were each fined $20 million in the SEC settlement.  Musk has also agreed to step down as chairman for at least the next three years.  Also, the SEC has ordered Tesla to oversee Musk’s tweets and any other public communications, which Musk assures will not require much on their part since he does not venture online to voice his opinions often. 

Finally, this announcement of two new Tesla board members seems to be quite supported by investors.  Upon releasing the news to the public, Tesla shares soared nearly 18 percent on the day, to reach $333.87.  While this is certainly an improvement, the day’s stock price is still much lower than its peak of $383.45, which it reached in June of 2017.

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