Science & Technology

Tesla Board Struggles to Contain Musk’s Hype Machine

Business Insider reports that Tesla’s board of directors is not doing a particularly good job of policing CEO Elon Musk’s social media posts, one of the main requirements of both Musk and Tesla’s SEC settlement.

Business Insider reports that despite Tesla being forced to appoint new independent directors following a settlement with the SEC over CEO Elon Musk’s infamous “funding secured” tweet, the board has still not been policing Musk’s tweets. Based on the SEC settlement, Tesla’s directors are meant to be actively monitoring the information that Musk discloses to shareholders, but two recent tweets from the CEO show that he has learned little from his previous reckless tweets and that the company board has little influence on what Musk posts to Twitter.

Given that Tesla is still under active investigation from both the DOJ and the SEC, now would be a time for Musk to tread lightly with his tweets, but the CEO has done the opposite of that. In a recent tweet, Musk stated: “Tesla made 0 cars in 2011, but will make around 500k in 2019.” Musk later attempted to clarify this tweet stating in another that the “annualized production rate at end of 2019 probably around 500K, ie 10k cars/week.” Musk then stated that the actual number of cars delivered for 2019 may be around 400,000.

If Tesla did indeed produce half a million cars in 2019, that would be almost double what the company produced in 2018, many analysts noted that this was extremely unlikely. In its report on Musk’s initial tweet, Bloomberg stated that Musk’s production goals were: “difficult to gauge, given his proclivity for setting stretch goals.”

As part of Tesla’s $20 million settlement with the SEC over Musk’s “funding secured” tweet, the company promised to reign in Musk and his various tweeting activities. Two independent directors were appointed to the company’s board with one acting as chairman, it was agreed that communications Musk made with investors would be pre-approved and a securities lawyer would be hired to review Musk’s tweets and various other communications.

After the agreement was reached, Musk’s close friend and confidant Robyn Denholm was appointed to the position of board chairman. Larry Ellison, the executive chairman of Oracle, and Kathleen Wilson-Thompson, the head of human resources at the Walgreens Boots Alliance, were also appointed to the board. But it appears that the appointment of these new faces to Tesla’s board has had little effect on Musk and his actions.

Business Insider reports that if Musk’s actions continue, Tesla could easily see themselves receiving another visit from the SEC:

Even as bad as Tesla’s board has been, one would have thought that the SEC charges last year would have jolted it out of its stupor. The company, after all, was forced to pay $20 million as part of the settlement. It also agreed that if there were a breach of the settlement, the SEC could attempt to resume the case in court.

That seems a real possibility. Separate from its investigation into the “funding secured” statements, the SEC has also been looking into Musk’s statements regarding expected and actual production rates of Tesla’s Model 3 — even before his latest tweets about them.

What’s more, the agency has an interest in making sure that companies adhere to the terms of the settlements it reaches with them; otherwise, why would anyone ` attention when it threatened to file charges against them? And Musk likely didn’t make many friends at the SEC when he dubbed it the “Shortseller Enrichment Commission” in a tweet soon after the agency filed charges against him related to the “funding secured” posts.

But it won’t take another SEC action against Tesla to make one thing clear: No matter how revamped the company’s board may be, it’s still worthless.

Read the full report in Business Insider here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or email him at [email protected]


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