At the very least, the board should require him to apologize and perhaps swear off Twitter
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By Antony Currie
NEW YORK (Reuters Breakingviews) - Elon Musk has put the board of Tesla on the spot. The $52-billion (all dollars US) electric-carmaker’s chief executive on June 15 sent a tweet suggesting, without evidence, that one of the men involved in rescuing 12 Thai boys and their soccer coach from flooded caves was a pedophile. Such a gratuitous and potentially libelous act deserves punishment. The trouble is, Tesla’s directors may be reluctant to mete it out.
The nine-member board is packed with Musk’s allies. One of them is his brother, Kimbal. Lead independent director Antonio Gracias runs a private-equity fund Musk has backed and was a director at another of Musk’s firms, SolarCity, before Tesla bought it in 2016. Others have connections to Musk’s SpaceX venture.
And neither Tesla nor SpaceX has yet decided what to do with director Steve Jurvetson, on leave from both after his own venture-capital firm, DFJ, ousted him last November during an investigation into personal misconduct.
Even with a different board, there’d still be a big problem: Musk’s and Tesla’s fortunes are essentially symbiotic. If his future were in question, the money-losing company would probably find it hard to raise capital, explain away missed deadlines and everything in between.
Musk’s prominence also narrows down the board’s options. Firing him for his “pedo guy” tweet could precipitate a crisis of confidence among investors. Unlike the eventual ouster of Travis Kalanick at privately held Uber, for a capital-hungry public company that might prove terminal.
Directors could consider stripping him of either the chairman or chief executive title. Or they could dock his compensation. KB Home boss Jeffrey Mezger lost a quarter of his bonus last year after a vulgar rant at neighbor Kathy Griffin. Removing 25 percent of what Musk could earn under his ambitious 10-year bonus package could deprive him of a potential $15 billion payout.
At the very least, the board should require him to apologize and perhaps swear off Twitter. To do nothing would send a worrying message: That directors are unwilling or unable to rein in Musk’s more troubling traits. Most shareholders may still be unfazed for now – the stock was only down around 3 percent by Monday afternoon. But such a laissez-faire attitude could come back to haunt them.
CONTEXT NEWS
- Tesla CEO Elon Musk could be facing a lawsuit from the British cave diver who found and helped rescue 12 Thai schoolboys and their soccer coach who got trapped in flooded caves in the country.
- When asked on July 16 by Australia’s Channel 7 news whether he would consider taking legal action against Musk for calling him a “pedo guy” on Twitter, Vern Unsworth replied “Yes. It’s not finished.”
- Musk posted the comment on July 15 after Unsworth had earlier said a mini-sub built by Musk’s team and taken to the cave site would have had “absolutely no chance of working.” He also called it a “PR stunt.”
- Musk followed up his tweet with another saying “Bet ya a signed dollar it’s true.”
- He has since deleted these two and all other tweets over the weekend related to the successful rescue of the stranded boys and their coach.
