Published Date : Oct 01, 2018
Tesla CEO Elon Musk has decided to quit his position as a chairman of the electric automobile manufacturer giant. Furthermore, he has to pay about US$20 mn in fine under a settlement done with the U.S. Securities and Exchange Commission.
More Details About Musk’s Decision to Quit His Chairman Post
Apart from keeping his CEO position, Musk will also retain a seat on the board, only sans his chairmanship. This agreement has led to a peaceful settlement from a likely bitter and potentially damaging scenario for Elon Musk, the company as a whole, and shareholders of Tesla.
The settlement demands Elon Musk to resign from his post of Tesla chairman within 45 days of the agreement, which was filed on last Saturday. Despite this agreement, Musk has agreed not to seek reelection or accept an appointment as chairman for minimum three years. For now, an independent chairman will be elected, under the settlement.
The US$20 mn fine will be paid by Tesla mainly for failing to require disclosure controls and procedures relating to Musk’s tweets. Furthermore, Musk does not need to admit or even deny the SEC’s allegations as a part of the agreement. Tesla has agreed to appoint two new directors to its boards and establish a new committee of independent directors. This is being done in order to implement additional controls in and procedures on Musk’s communication, according to SEC.
This means that Musk who earlier used to turn to Twitter on a frequent basis for unveiling new products, features, and updates on multiple companies, will now be more restricted term of such actions. According to Steven Peikin, the co-director of the SEC’s Enforcement Division, this resolution is intended to prevent further market disruption and harm to Tesla’s shareholders. From an overall perspective, the agreement marks the beginning of a new era of corporate governance for Tesla.