New York: Outgoing Twenty-First Century Fox Inc Chief Executive James Murdoch is the lead candidate to replace Elon Musk as Tesla Inc chairman, the Financial Times reported, citing the two people briefed on the discussions.
Tesla has until November 13 to appoint an independent chairman of the board, part of settlements reached last month between Tesla, Musk and US regulators in the wake of Musk tweeting in August that he had secured funding to take the electric car maker private. The settlement capped months of debate and some investor calls for stronger oversight of Musk, whose recent erratic public behaviour raised concerns about his ability to steer the money-losing company through a rocky phase of growth.
The US Securities and Exchange Commission, which said Musk’s tweeted statements were fraudulent, allowed the billionaire to retain his role as CEO while requiring he give up his chairmanship.
In a vote of confidence for Musk, shareholder T. Rowe Price Group Inc said in a regulatory filing on Wednesday that it had raised its stake by nearly half to 10.2% at the end of September from just under 7% in June. Murdoch, already an independent director of Tesla, has signalled he wants the job, the report said.
“Musk is the public face of Tesla, and any chairman would have to contend with his powerful personality. The question when it comes to James Murdoch is, ‘Is he the guy who’ll be able to establish that level of authority with Elon Musk?'” said Abby Adlerman, CEO of Boardspan.
Stability at the top
- Tesla faces a crucial moment as it struggles to produce its Model 3 sedan in large volume and deliver it quickly to customers amid an ongoing cash crunch that has concerned some analysts. Musk has vowed that the loss-making company will be profitable and cash flow-positive in its third and fourth quarters.
- Concerns about Musk due to production delays have been exacerbated by a series of damaging actions, including Musk insulting analysts on a conference call, calling a British cave rescuer a pedophile, and joking on April Fool’s Day that Tesla was going bankrupt.
- “Elon Musk is building a great company but has been erratic to say the least when it comes to thinking about his investors,” said Chaim Siegel, an analyst at Elazar Advisors. “The company needs some added stability at the top to win back investor confidence.”
- Under terms of the SEC settlement, Musk is not permitted to be re-elected to chairman’s post for 3 years.