James Murdoch appears to be the top choice to take over the chairman's role from Tesla founder and CEO Elon Musk.
James Murdoch, the outgoing CEO of Twenty-First Century Fox and an outside director on the Tesla board of directors, appears to be the favored candidate to replace the carmaker’s founder and CEO Elon Musk, who must relinquish the chairman’s role as part of a settlement with the SEC.
Murdoch’s name has surfaced several times since Musk agreed to step down from the chairman side of his dual role to settle charges of fraud leveled against him by the Securities and Exchange Commission for claiming Tesla had “funding secured” for a bid to go private. Musk later confirmed there was no firm plan or funding and subsequently canceled the move to privatize Tesla.
According to a report by the Financial Times, several sources close to the discussions inside Tesla said Murdoch was a primary choice for chairman. He has been serving as a non-executive director since 2017. But while the son of Australian mogul Rupert Murdoch has extensive media experience, his time with Tesla marks his only involvement in the auto industry.
“It seems the key requirement is that whomever they pick doesn’t have experience in the auto business,” a source close to Tesla told TheDetroitBureau.com, comparing such a move to what happened at Theranos, the now insolvent medical device firm whose top two executives have been charged with fraud.
(Musk under fire again, this time from his supporters. Click Here for the story.)
Murdoch may have other issues that could scuttle any push to name him chairman. In May, ahead of the annual Tesla shareholders meeting, Murdoch’s bid for re-election was opposed by two prominent proxy advisory firms, Glass Lewis & Co. and Institutional Shareholder Services, as well as activist investment firm CtW Investment Group.
Tesla CEO Musk is turning over the chairman's role as part of his settlement with the SEC.
Glass Lewis, in particular, noted that Murdoch already served on too many boards, and had “a troubled history as an executive and director.”
The 45-year-old British-Australian businessmen succeeded his father as chief executive of Twenty-First Century Fox, but is set to relinquish that role once it completes the sale of key media assets, notably its filmmaking operations, to Walt Disney. (It will retain, among other pieces, its Fox News and Fox Business operations.) James Murdoch will be replaced by his brother Lachlan as CEO of the downsized Fox.
Several requests for comment by Tesla went without a reply.
Musk has been under pressure from critics to give up one of his two titles for several years. What finally forced his hand was the controversy over his August tweet declaring Tesla was set to go private at a stock price of $420 a share. The Aug. 7 posting indicated “Funding secured,” something that caused Tesla shareholders to wildly bid up the stock price for several days.
(Click Here for more about Tesla taking heat as Musk lashes out.)
A week after the initial tweet, however, Musk backed down, indicating he came up with the idea after a meeting with executives from the Saudi Arabian sovereign investment fund and had no clear plan for privatization. He also appeared to have come up with the $420 number – “420” being common slang for marijuana – to impress his girlfriend, according to comments made in an interview.
Musk slammed the SEC in this tweet, calling the agency the Shortseller Enrichment Commission, Can, or will, Murdoch curb this behavior from Musk?
The SEC quickly launched an investigation and, late last month, sued Musk, alleging he made “false and misleading statements” to investors. On Nov. 1, Musk moved to settle the complaint, paying a $20 million fine and agreeing to step down as Tesla chairman within 45 days.
Some observers said they hoped the agreement would help tone down Musk’s increasingly erratic behavior which, in recent months, has seen him attack journalists and industry analysts, and even one of the divers involved in rescuing a youth soccer team trapped in a flooded Thai cave. The diver has since filed suit in both Los Angeles and London.
But Musk quickly dashed such hopes, late last week taking aim at the SEC, dubbing it the “Shortseller Enrichment Commission.” A number of observers have suggested his original privatization tweet was aimed at hurting the short-sellers who have become a particular thorn in the South African-born executive’s side.
(To see more about Musk paying the SEC $20 million, resigning as chairman, Click Here.)
If Musk won’t tone down his frequent tweets, both critics and allies alike appear to be hoping that whomever does come aboard as Tesla’s next chairman will be strong enough to rein in the executive’s itchy twitter finger.