Elon Musk's capricious behavior was again this week ahead and as the CEO of Tesla admitted that he was overwhelmed by work stress, his electric car company pushed the stock down and pushed the board to take action.
Musk's revelation, in an interview with the New York Times on Thursday, when government authorities were reportedly investigating whether his recent, unreliable tweet about Tesla's private taking violated the disclosure requirements.
According to experts, Tesla has now arrived at a crossroads where the board must determine the direction of its leadership. Among their suggestions: removing Musk as CEO, permanently or through temporary leave, or appointing a second leader who could act as a stable hand.
"It is rather bizarre," said Charles Elson, director of the corporate governance center at the University of Delaware. "It is a drama that we should not look at."
Tesla offers challenges for the CEO: it routinely loses money and burns money, while boosting the development of its Model 3 sedan, a less expensive electric vehicle. car hopes it appeals to the mass market. A large number of investors known as short sellers have gambling against the company.
Musk has increased this pressure with lofty projections for profit and production that Tesla often fails. Moreover, the eccentric billionaire is the head of at least two other companies, including the rocket company Space X.
Musk admitted that the last year is the most difficult and painful & # 39; was in his career. The newspaper reported that during an hour-long telephone interview on Thursday, an emotional musk acknowledged that he was working up to 120 hours a week and sometimes took Ambien to fall asleep.
However, he said that he has no plans to give up his dual role as chairman and CEO of Tesla.
"Let me know if you have someone better, they can get the job done, is there someone who can do the job better? They can now have the reins," he told the newspaper.
The board of Tesla did not feel like taking action on Friday. In a statement to The Associated Press, the leaders praised Musk's leadership, saying that he had put hundreds of thousands of popular cars on the road, created tens of thousands of jobs, and created significant returns for the shareholders. Musk was not involved in drafting the statement.
The shares of Tesla Inc. tumbled about 9 percent and closed Friday at $ 305.50, the lowest level since August 1st. For the week, the company's share lost 14 percent or $ 8.5 billion in the market
Recent developments put directors in a difficult position because Musk, who entered Tesla as a major investor and built the company into a force that increases the perception of electric cars has changed, the public identity of the company is.
But Erik Gordon, professor of law and business at the University of Michigan, said the board has a duty to the shareholders.
"If the board does not dismiss him at least on the basis of leave, I think the board will be seen by many people who love the company because it is alienated in their duties," said Gordon Friday.
The board found itself behind Musk despite some bizarre behavior. For example, in a recent tweet, he labeled a diver who helped rescue Thai footballers in the cave as a pedophile. He apologized later.
But a tweet from Musk said he fired on August 7 as he drove to the airport to force the board to act. In it, Musk said that he had "secured funding" to take Tesla privately. Investors pushed Tesla's stock up 11 percent a day, raising the value by $ 6 billion.
There are several reports that the US Securities and Exchange Commission is investigating disclosure, including asking directors what they knew about Musk's plans. Experts say that regulators are likely to investigate whether Musk in the tweet was honest about having the financing for the deal.
Musk told the Times that he is in the tweet.
In a normal operation, Musk, 47, would have already been replaced, Elson said. But Tesla is not normal.
Elson said that most directors of the company have relationships with Musk, which holds about 20 percent of the company.
"At some point the government will have to assert its authority," said Elson. "They are at a point where they have to renounce their previous relationships."
But even if the board of Tesla wanted to remove Musk as CEO, it would be dangerous to do it abruptly, given how much faith investors have in Musk, said David Whiston, equity strategist at Morningstar. Even with this week's losses, Tesla's market value is $ 52.12 billion, slightly higher than at General Motors.
"Without the cult of personality around Elon, they are just a personality cult that burns a lot of money."
It is clear from the interview that Musk is overworked, and Whiston said it might be the best way to hire another manager to help with daily operations. The challenge would be to find someone at work but still willing to work at a company that is so dominated by one person, says Whiston.
The Times called people who were familiar with the situation as follows: Tesla has tried a No. to relieve part of the pressure on Musk.
The board of Tesla earlier this week formed a special committee to evaluate proposals to take the company privately. Tesla later revealed that Musk had talked about a deal with Saudi Arabia's investment fund.
First published: August 18, 2018 08:22 IST