WASHINTON - Tesla'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 chairperson and chief executive, with shares plunging 8.9percent on Friday, the largest drop in nearly two years. The references to Ambien use and driving while tweeting are fuelling calls for Tesla’s board to step up its oversight of the company’s chief executive and largest shareholder.
“If the board is going to take any initiative, they will clamp him down,” said Maryann Keller, an independent car industry analyst in Stamford, Connecticut. “He isn’t doing the stock or the perception of him as a leader any good.”
Musk, in a tweet yesterday responding to an open letter from “sleep evangelist” Arianna Huffington urging him to change his work habits, ruled out taking a different course. “Ford & Tesla are the only 2 American car companies to avoid bankruptcy. I just got back home from the factory. You think this is an an option. It is not.”
Musk said he didn’t recall communications from the board and that he “definitely did not get calls from irate directors” that he had “funding secured” to go private. He later amended the comment through a spokesperson, saying lead independent director Antonio Gracias had contacted him about the tweet. Musk agreed not to tweet again on the possible transaction without discussing it with the board.
Many hats
Among the challenges of supervising a peripatetic entrepreneur is that running Tesla isn’t his only job. He is also chairperson and chief executive 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 chief executive. 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.”
This week, that hasn’t been the case. After the stock soared to a record intraday high of $387.46 (R5671.50) on August 7, it’s had its worst week since 2016, ending at $305.50.