Author: Aarian Marshall / Source: WIRED
In early August, Tesla CEO Elon Musk
According to documents filed in a New York federal court, Musk and Tesla will have to each write $20 million checks for the misadventure, which will be disbursed to investors harmed during the wild market swings that occurred after Musk’s tweets. (Tesla announced in late August, 17 days after the tweet, that it would remain public.) The electric carmaker will appoint two additional independent members to its board. The company will have to keep firm oversight over Musk’s communications with investors—including by tweet. Most critically: Musk will have to step down from his role as Tesla chairperson for at least three years. He will remain on as the company’s CEO and will retain a seat on its board.
In reaching a settlement with the federal enforcement agency, Musk and the company seem to have reversed course. Last week, Tesla had reportedly been on the cusp of a settlement with the SEC, before backing out.
Despite that waffling, legal experts say the result could have been much, much worse for Musk and his car company, where he has served as chairperson since 2004 and CEO since 2008. “Frankly, I view this as somewhat favorable to Musk,” says Stephen Diamond, a professor of securities law and corporate governance at the Santa Clara University School of Law. “He remains CEO, he’s still the dominant stockholder in the company, and he still remains in place on the board.” (Musk owns about 22 percent of Tesla shares.)
By relinquishing his role as chairperson, Musk does lose his ability to call board meetings, as…
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