Thursday Oct 11, 2018
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 on Wednesday, citing 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 company private.
The US Securities and Exchange Commission (SEC), which said the statement was fraudulent, allowed the billionaire to retain his role as CEO while stripping him of his chairmanship and imposing a penalty of $20 million on each party.
Murdoch, who is a nonexecutive director of Tesla, has signalled he wants the job, the report said.
The son of Fox mogul Rupert Murdoch, he joined Tesla’s board in July 2017 after years of work with media companies. He has no experience in manufacturing and has never led a company that makes cars or electric vehicles.
Murdoch could not immediately be reached for comment. Tesla did not immediately respond to a request for comment. Twenty-First Century Fox declined to comment.
Earlier this year, leading US proxy advisers Glass Lewis & Co and Institutional Shareholder Services, and union-affiliated investment adviser CtW Investment Group, had recommended investors cast votes “against” James Murdoch as a Tesla director at the company’s annual meeting held on June 5.
While the latter cited a lack of relevant experience and a “troubled history as an executive and director”, both proxy firms warned that Murdoch already served on too many boards.
Murdoch currently serves on the boards of Twenty-First Century Fox and News Corp. He stepped down from the board of Sky Plc on Tuesday following the completion of Comcast Corp’s takeover of the broadcaster.
Glass Lewis research director Courteney Keatinge said in a telephone interview on Wednesday that while Murdoch’s departure from Sky could alleviate some concerns, the Tesla chairmanship would still require a big time commitment as the company faces pressures on many fronts.
“I would still have reservations about the time he would be able to allot to this,” Keatinge said, referring to the possibility of Murdoch as Tesla chairman. According to the FT report, external options were still being considered.
Murdoch is set to be succeeded by his brother Lachlan Murdoch as Twenty-First Century Fox chief executive officer after the media group completes the sale of the bulk of its assets to Walt Disney.
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.
The SEC sued Musk on September 27, alleging that a series of “false and misleading” tweets he made in August about potentially taking Tesla private constituted securities fraud. The parties settled two days later.
Under terms of the settlement, Musk is not permitted to be re-elected to the chairman post for three years. Tesla is also required to appoint two new independent directors to its board.
With US stock markets broadly lower, Tesla shares pared losses to trade down 1.8 percent at $257.96 shortly before the close on Wednesday.