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Besides a new chairman, Tesla was also ordered to appoint two

Jan 31, 2015

New Tesla Chair Must Rein in CEO Musk at Key Moment

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canada goose clearance HomeTransportationTransportation Share on Facebook Tweet Share Email Reddit CommentNew chairman of Tesla will face the task of reining in Elon Musk Musk is giving up the chairman’s role under a settlement with US SEC A more assertive board canada goose outlet location could provide tighter oversight canada goose clearance

It won’t be an easy job.

Whoever becomes the new chairman of Tesla Motors will face the formidable task of reining in Elon Musk, the charismatic, visionary chief executive with an impulsive streak, while also helping canada goose outlet mall Musk achieve his dream of turning Tesla into a profitable, mass market producer of environmentally friendly electric cars.

Musk is giving up the chairman’s role under a settlement announced Saturday with the Securities and Exchange Commission. Besides a new chairman, Tesla was also ordered to appoint two new, independent members to its board. A more assertive board could provide the kind of tighter oversight that canada goose outlet ottawa many legal experts, and Tesla investors, say is overdue for a company of Tesla’s market value.

The settlement stemmed from a lawsuit the SEC filed charging Musk with misleading investors in August with a tweet that said he had “funding secured” for taking the company private.

buy canada goose jacket cheap Yet a more forceful board, coupled with a domineering CEO like Musk, could create conflicts at a risky time for the company. Visionary CEOs such as Apple’s Steve Jobs and Twitter’s Jack Dorsey have been forced out by strong boards of directors, though both eventually returned to canada goose outlet 80 off their companies. buy canada goose jacket cheap

Canada Goose Outlet Even with the settlement, Tesla faces a daunting array of challenges. Canada Goose Outlet

canada goose uk shop The Justice Department has opened its own investigation into Musk’s August 7 tweet, in which he said he would take the company private at $420 a share. The SEC’s lawsuit charged canada goose outlet legit that the tweet, which caused Tesla’s shares to jump, was misleading because he did not actually have the funding lined up for such a move. canada goose uk shop

Tesla is also under heavy pressure to turn a profit because it is burning through $1 billion in cash every three months and, as of the end of canada goose outlet store calgary June, had just $2.2 billion in the bank.

Musk has said the company needs to produce 7,000 cars a week to make money, a target cheap canada goose he aimed to reach in the July September quarter. The company is likely to report production numbers this week and financial results from that quarter in early November.

Another concern: About $1.3 billion in Tesla debt is due to be repaid by March, including $230 million in November.

Canada Goose Parka Some investors might want more than a new chairman. Tesla has no chief operating officer, a critical No. 2 executive in most companies. That’s a stark contrast to other startups, such as Facebook, where Mark Zuckerberg hired Sheryl Sandberg as a highly influential COO. Canada Goose Parka

In the lawsuit filed Thursday by the SEC, the agency said it was seeking to remove Musk from Tesla management altogether. Many investors have argued that keeping Musk as CEO is critical at such a time.

“I do not doubt the value of Musk to Tesla,” John Coffee, a Columbia University law professor and corporate governance expert, said. “Without him, they are just a struggling start up that is burning cash at a hopeless rate and is facing a debt refunding crisis in the near future.

cheap Canada Goose “Musk is an iconic entrepreneur but he needs adult supervision,” Coffee added. cheap Canada Goose

canada goose coats That’s where the new board members come in. The current board, which includes Musk’s brother, Kimbal Musk, is widely seen as subservient to Musk. They have publicly expressed support for many recent moves, such as his rejection last week of an early SEC settlement offer. canada goose coats

canada goose black friday sale “The board is truly the alpha chapter of the Elon Musk fan club,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. canada goose black friday sale

Teresa Goody, a former SEC canada goose outlet parka attorney and founder of The Goody Group, a consulting firm, said that many startups begin with a powerful CEO who typically puts “friendlies” on the board.

As a company grows and becomes more sophisticated, Goody said, more independent directors are typically brought on board to https://www.canadagoosejacketoutlett.com provide better oversight.

“That’s happening a little later in the life cycle of the company in the case of Tesla,” she said.

Still, Elon Musk is different than many CEOs because he owns roughly 20 percent of the company’s stock. That gives him more influence.