Seriously? Anyone who couldn't think of THE PRIME EXAMPLE of the moment is either not paying attention to politics whatsoever or has an extreme political bias blinding them to the obvious excuse.
I'll give you one hint: the only world leader that has been laughed at openly by the UN general assembly.
Elon is worth $20b [1]. $20m is 0.1% of his net worth. That's like a $1000 fine for someone who has "only" $1m. I have quite a bit less than $1m and a $1000 fine, while not nothing, would make me cranky for a week or a two but have almost no material impact on my life.
I couldn't tell you what interest rate he's likely to pay but in general in this situation, there is interest. Whoever lends him the money has their own cost of funds and admin costs to cover at a minimum, even if they view repayment as close to zero risk because the collateral is very good.
As far as I heard, he is already heavily leveraged against his stock in multiple loans that total into the billions. And his side of that deal just lost quite a bit of substance due to TSLA shares losing value, with a lot more of largely empty space (= high premium assigned to the stock price by investors due to perceived potential) to possibly fall until the bottom comes.
That story tries to sell a darker picture than it really is. 40% of his stock is leveraged, which still only amounts to about $4B (less than that) of his $20B net worth.
Larry Ellison has a $11B line of credit leveraged against 30% of his Oracle shares. This is a non-story.
Genuine question: he presumably has $20m of Tesla stock he can sell tomorrow if he wants. Since it's a public stock. Or $2m/day for the next two weeks. So what do you mean?
Sure he's not gonna sell all his stock... but in this particular case, it feels like a distinction without a difference.
He'd never sell Tesla stock over a $20m fine. It's an important difference as far as he's concerned, because he has openly held a position of not selling his Tesla stock. It's a confidence issue with Tesla and its shareholders.
People in his position often borrow against assets via credit lines or similar instead. He's carrying an $890m misc liability in his wealth analysis by Bloomberg (13.8m shares pledged against personal obligations).[1] That's Musk borrowing for any variety of expensive life purposes (such as putting $100m into the Boring Company), specifically so he doesn't have to sell equity. An obviously slightly risky move when SpaceX is private and Tesla is volatile and unprofitable.
Larry Ellison as one famous example, had a large credit line against his Oracle stock and used it to buy real estate, live lavishly etc. Eventually the liability got big enough - several billion dollars - his accountant strongly encouraged him to pare it down and go on a budget. Ellison though now receives $500m+ per year in dividends from Oracle, and has since wiped out the large liability.
> Settlement Requires Musk to Step Down as Tesla’s Chairman; Tesla to Appoint Additional Independent Directors; Tesla and Musk Agree to Pay $40 million in Penalties
> Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
A bit anticlimactic. The only reason the SEC brought charges publicly was because Musk refused the first settlement offer (with similar conditions) anyways.
There’s the still the DOJ investigation, so he’s very much in potential hot water, albeit less so than before. The odds of him facing criminal charges was always lower than the civil side, but he’s still at risk. Plus, he’s still facing a raft of civil suits beyond the SEC, even beyond the one from the man he kept accusing of being a pedophile.
I don't think so. He was in much more risk before, with SEC investigation. The accuser in civil suit is asking for $75k worth of damages. I think Musk can pay off that fine and be free from it. I guess there will be no jail time. Although, i'm not a lawyer.
The defamation accuser's complaint alleges compensatory damages "in excess of" $75k only because it's a jurisdictional requirement for US federal court. He will seek much more at trial, plus additional punitive damages.
well it turned into a classic no admit no deny settlement
this is a much better settlement and easier to swallow.
if he had to admit it then the criminal charge would have been emboldened. unfortunately the settlement itself can still be used as ammunition, but it is contains no admission (or denial) of guilt.
The proposal they previously rejected had an offer of no admission of guilt as well.[1] It's a very slightly worse settlement now, the apparent duration that he is barred from the chairmanship was increased by a year.
Most likely Musk wanted the optics of declaring himself innocent, rejecting the offer and feigning a fight. I'd be surprised if everyone around him have not been encouraging him to settle, the downside risk was far too great vs the modest settlement pain.
I've been wondering if he didn't settle because he wanted to gauge the reaction to fighting it out. Like you, I bet there was a lot of pressure put on by stakeholders to negotiate a settlement once it became public.
I think this is the best outcome we can have (although there might be other lawsuits from the short sellers).
Elon will learn a hard lesson, there will be a committee and procedures to control his communication channels. He will still be CEO and the spirit of Tesla will be unharmed in the long run.
As much as I see myself as an objective person, Elon is genuine in his passion and his vision. Derailing him to jail time or prison would be a net loss for humanity, however objectively and legally inconsistent it may be.
Edit: The news cycle and PR things have a very short term memory. Just a year ago, people were praising him for his style and overall he was considered an extraordinary leader, CEO and a visionary.
I don't really know what it says about the CEO of a company if they basically have to put him under supervision. He's not a kindergartner.
I feel this reliance on Musk as a face of the company is increasingly the biggest selling point of the company, which will be unhealthy in the long run.
I don't really know what it says about the CEO of a
company if they basically have to put him under
supervision. He's not a kindergartner.
The vast majority of Fortune 500 companies don't have celeb CEOs who make official announcements through their personal twitter accounts.
Warren Buffett doesn't compose his letters to shareholders in 30 seconds from his cell phone while he's on the toilet. He probably runs them past a handful of people and waits a few days to look at them with a fresh pair of eyes before he sends them out, like a college student would with their thesis.
It's normal ceo behaviour to run your statements by PR people, but it isn't normal to have that forced onto you by your board after you were just fined a 20 million dollar fine by the SEC because you went on a twitter bender
This was never remotely a concern. The most severe punishment sought was barring him from being a director or CEO of a public company. They settled on a paltry fine and Musk can't be chair. He's still CEO, he's still on the board, and the fine is less than insignificant.
Honestly losing access to his Twitter account is probably the most severe.
If I was an institutional investor I'd be pissed he's not out as CEO.
Musk is talented at start-ups but has been a disaster at running scaled up companies. His risk taking on Model 3 assembly line automation nearly sunk Tesla and could still do do. BFR could sink SpaceX, it's a rocket for Mars colonization without a customer.
I'm a huge fan of his accomplishments but the risk taking coupled with the erratic behavior is too much. His boards should kick him out.
I agree that he has gone a bit lunatic recently, but everyone was praising him just a year ago.
I feel like a lot of recent hate has to do with his erratic behavior in recent year. But, lets just look back at 2017 - everyone was praising him for his leadership.
A few PR incidents and now all of a sudden he is incapable as a CEO?
Well, not that is more in the hands of the rest of the shareholders. He's no longer on the board and there will be new independent board members so it will be all the easier to remove him as CEO if that is the thing that the shareholders want.
Good point, the independent investors could make it more likely he be removed if he continues to be erratic. And Blackrock did propose having him step down as chairman.
> Derailing him to jail time or prison would be a net loss for humanity, however objectively and legally inconsistent it may be.
I hate this perspective. As a member of humanity, I want everyone to face equal justice, no matter how pivotal to a particular project or movement they may be. There will always be more visionaries.
Anything else will eventually and inevitably lead to violence.
Absolutely. Even if it Apollo failed and it took 50 more years for humanity to reach the moon, these are small numbers on the scale of human history. Jailing Musk wouldn't mean humanity is forever unable to have electric cars or go to Mars. As another HN user quoted recently, the graveyards are filled with indispensable men.
It's particularly relevant to Apollo considering Werner von Braun. In hindsight, it looks less urgent because we didn't do a lot with the intervening years.. but it could have been different.
Not sure why people downvoted my question, it's an interesting line of inquiry. Maybe they don't know their history.
I'm not particularly a fan of Musk, but the purported objective of SEC enforcement is to protect investors. If (as I read a day or two ago) the stock plunged on news of enforcement, then it's reasonable to question whether punishing him makes sense. Are the stockholders really better off with less (or no) Musk? Maybe, but does the SEC know better than the market? In any case, I'm not sure how or if "equal justice" is relevant.
I'm not sure deterrence is applicable. Someone commented in an earlier thread that Musk is slightly bipolar/manic at times. Fining him is not going to deter him from having symptoms, nor will letting him go encourage another person to have such symptoms. Your theory seems like spanking your child for catching the flu.
Of course, it might be that his tweets are being considered in the larger context of recent irresponsible tweeting by those in power, and thus from the perspective of enforcement it looks like a rising tide.
The SEC isn't there to simply "protect investors". Your implication is the investors worth protecting are those with long positions. What about the shorts?
The SEC are there to protect the integrity of the market. Things like fraudulent information, insider trading, etc are corrosive to the mechanisms which a well functioning market requires.
"Your implication is the investors worth protecting are those with long positions"
Maybe there should be a bias towards those who benefit from the continuing viability of the company and maybe not.
But in this case, I suggest it's moot just because the damage to longs appeared to be significantly greater than the damage to shorts and it doesn't counterbalance anyway.
The penalties seem arbitrary to me. Transferring several million (or billion) dollars around as they are doing doesn't seem to rectify in any way the purported injustice to shorts. The whole episode drove down the stock quite a bit, so longs have suffered a lot, shorts have suffered somewhat, and the government collected a commission. Nobody has had wrongs rectified, and it's unknown whether prying Musk away from Tesla is a net gain.
Personally, I was neither long nor short TSLA at the time of the tweet, and I don't think short sellers are inherently illegitimate. However, I think the existence of a public company generally serves a social purpose and long investors are not quite symmetric with short investors. If, in general, there is a dispute where you can apply long investors' concept of fairness, or you can apply short investors' concept of fairness, it kind of makes sense that what damages the company less is probably the right answer, barring something like Theranos that shouldn't exist at all.
You’re trying to define investors as only people owning Tesla stock. The SEC specifies the penalties will go to investors hurt by Musks actions, which I take to mean stock market investors who Elon targeted by using his position as ceo to spread information that he knew to be misleading in order to harm their positions. It doesn’t really make sense to try and define ‘equal justice’ from the vantage point of those people who were helped by the illegal actions in question.
You (and others) seem to assume there's a zero-sum game between long and short investors and I'm neglecting the interests of the shorts.
I don't think it follows that what harms longs benefits the shorts that were harmed by Musk's tweets. So there is no benefit to compare to the harm done by the enforcement.
Unless you think that reducing Musk's role in the company will lead to the downfall of the company and that is a good thing because someone will profit, which seems like a weird idea to me.
I think Elon Musk knowingly misled the public in order to harm the financial positions of certain investors - and it seems his settlement with the SEC indicates that he accepts those charges against him. I think it’s inappropriate for companies in the public market to be led by individuals who attempt such fraud, and it seems like both Elon Musk and the SEC have the same opinion. I think much more harm would be done to the financial markets if people are allowed to commit fraud without repercussions - the settlement, again, wasn’t reached by considering how to best ensure Elon musk and Tesla remain profitable, it was made in consideration of how to dissuade other ceo’s in committing similar frauds.
I also want to suggest, for all the people who want to say "what about the shorts", that every share of stock you sell short is borrowed from somebody who is long. So that seems like a fundamental reason to not consider shorts equal and opposite counterparts of longs. Whatever the details of the defined rights of both parties are, the rights of shorts have to defer to the rights of longs to some extent.
By analogy, if you borrow a car, and your interests seriously conflict with the owner, then probably for the good of society, and the rental market, there needs to be protection of the owner's rights.
I'm somewhat ashamed for feeling compelled to disagree. I know the right thing is to agree completely with you. Justice should be blind, and I've complained about that in other cases.
At the same time, it seems these days that there are so few people really working for the advancement of humanity to the extent that Musk is. (And just to try to abort the inevitable replies: yeah, I get that he isn't a saint, and yeah, he's done some pretty stupid, ugly, awful things.)
You're right that there will always be more visionaries, but the ones that are capable of executing grand visions that improve humanity seem to only roll around once a generation or so. They absolutely shouldn't be given a pass for terrible behavior, but I hate to see society so eager to tear at them, too.
Sure, I'd agree with this argument if he sexually assaulted someone or got a DUI or something. Nobody is "too valuable to go to jail".
But jail time for a random tweet seems like overkill, and removing him from Tesla for this does feel like it would be a net negative. He was heavily fined, which seems more fair.
I’m not going to argue sentencing, but I feel it’s necessary to point out that Musk doesn’t get to make random tweets, especially about price-sensitive investor information. The SEC treats his account as a corporate mouthpiece and anything he says on it can be treated as an official statement. This isn’t his first rodeo: he should know this stuff off by heart. As it is, you have to wonder what other fiduciary duties he’s not up to speed on.
It doesn't make sense to prosecute every violation with maximum penalties allowable under the law. It's just not how the legal system works.
e.g. Google was alleged to have illegally issued options to their employees back in 2004 by the SEC. If they prosecuted Google's board and officers with maximum penalty in a federal court (and the court allowed such nonsense), then both Larry and Sergey (and a bunch of executives) would end up with 5-year prison sentences before Google had a chance to go IPO. But such a course of action is obviously not in public interest - the amount of damage to investors and the public in general caused by the remedy would far outweigh whatever irregularities in option grants that Google committed.
And btw, the same securities laws also apply when you open a startup and raise funds or issue options. It's not "Oh but Google is rich and I'm poor these laws won't hit me". Quite a number of securities law violations don't require intent. A single filing error by your lawyers can mean you're already in violation (and, years in prison if you use the maximum penalty) - even if you're just a tiny startup with $100k.
Both prosecutors and courts have always been walking a fine line on what's considered fair for each particular circumstance. It's how it has always been.
But that is not what the parent comment to yours was arguing. He wasn't asking for the maximum available penalty, he was just saying that, in essence, justice should be blind, and criminal penalties should not be lessened based on the wealth or power of the convicted.
Using your own example, he was basically saying that if someone with "a tiny startup with $100k" was guilty of the same crime, he should face the same penalties as Musk.
> Anything else will eventually and inevitably lead to violence.
I agree, but why has punishment and enforcement become so utterly derailed from reality or just.... basic morality?
They went after Musk hard because it was a trivial slam-dunk no-effort case. For a tweet.
Then you look at truly evil people who have committed acts of outright fraud who walk due to simply playing the game the government wants you to.
So while I agree with your point, I have very large reservations with current enforcement institutions. Go after a high-performing unconventional guy like Musk who actually accomplishes things with the entire weight of the federal government - but let the parasitic bankers who caused actual damage with outright fraud in the real world completely skate because prosecution would have actually taken work and been career risky.
My limited experience with the enforcement arms of the federal government simply affirmed this point of view. They only care about themselves and their personal careers, and could care less about actually protecting the people or even remotely attempting to find justice.
But if you tweet something that harms some wealthy short sellers there will be hell to pay within weeks.
Yes, this is hyperbolic and could be articulated better - but it's been something I've been chewing on now for decades.
Derailing him to jail time or prison would be a net loss for humanity, however objectively and legally inconsistent it may be.
I have nothing against Musk but this is an awful argument. You are simply not in a position to opine on what is a net gain or loss for humanity, so you're arguing that we should make decisions based on the best imaginable future outcome because he already has some notable achievements. Without commenting on the guy at all, please just reflect that almost any wealthy business person has a PR team that not only highlights the person's positive qualities, but works hard to disseminate those opinions in public to maximize the value of the person's reputation.
OT but why do people refer to him as Elon? I’m assuming you aren’t personal friends with him. So whenever I see someone refer to him as Elon, in faux “first-name terms informality”, it immediately makes them look like they’re part of the fan club and reduces their credibility.
In my case, when I talk about "Barack Obama", I have always said "Obama". Whereas, if I am talking to anyone about "Elon Musk", I always say "Elon". Don't read too much into it.
Elon is more common than Musk, so if anything, it’s more vague who you’re referring to. Though I don’t think either would be unclear on a post about Elon Musk.
Because he's a person just like everyone else, isn't in a position of authority over anyone except his employees, and hasn't done anything to warrant using formal titles when referring to him in casual conversation. What do you think he's done that merits everyone treating him with additional respect?
Normally, when referring to public figures, you use their first name or just their surname. So, Trump rather than Donald. Not out of respect, but it’s just more usual.
Eh, we kinda just pull the convention out of thin air based on some combination of their name, other names they might be confused with, what they are widely known as, their preferences, and the rhetorical effect we're aiming for.
I mean, not many people refer to Hulk Hogan as Mr Bollea, or Madonna as Ms Ciccone. But you might refer to Obama as Barack Hussein Obama if you want to draw attention to the fact his middle name sounds like a middle-eastern dictator.
> Derailing him to jail time or prison would be a net loss for humanity
If jailing someone who has committed fraud is a loss to humanity, then I am glad not to be part of it.
The amount of circle-jerking and asshole-worship has gone through the roof here. I mean, yes, after Steve Jobs, some prople need someone else to satisfy their dick-sucking urges, but come on! There has to be a limit to it.
SEC has no authority to bring criminal charges, so unless the US Attorneys Office got involved thay was not in the cards. Too severe for what he did, in my opinion.
"Derailing him to jail time or prison would be a net loss for humanity, however objectively and legally inconsistent it may be."
The number one criterion for a functioning democracy is a reliable and consistent application of the law to everybody without exception. Declaring that somebody should be above the law is a very dangerous path.
The problems with Musk are far more than just his overwork. There’s a lot to work on.
There’s been persistent rumours of serious drug use. His outbursts are erratic and unhinged ie. calling a diver a paedophile on multiple occasions. His private life is extraordinary for a CEO to say the least. He clearly lacks self control ie Twitter and Joe Rogen show. And his I’m the victim attitude towards short sellers, media etc is pretty unparalleled.
I suspect that losing the Chairman position is the last step before being removed as CEO.
All of this is from last 6-12 months. Let's not forget what public opinion was without the news cycle telling us what to think.
I am not saying his public statements were bad. Just trying to put some perspective. Also, smoking marijuana is ok and legal. He took a puff and all of a sudden he is a drug addict. WTF!?
Just watch his interview Salman Khan (Khan academy) or look up his accomplishments.
It is illegal on a federal level. And as someone who runs a company with multi-billion-dollar National Defense contracts, which are almost certainly contingent on him holding a security clearance, it shows an incredible lack of judgement to consume marijuana publicly.
the rumors about Musk having a drug problem predated his appearance on Rogan - the first I heard of the rumors was from Azealia Banks's (questionably reliable source) rant about her weekend with Grimes at Elon's house.
Because he smoked pot on a podcast? Come on buddy it's not 1950 anymore, everyone knows marijuana (except when used in excess regularly) is totally and completely harmless.
Lets be honest these 'persistent' rumors are persistent because the media loves this story and everybody loves to repeat these things and make a big narrative out of it. The NewYork Times made him out to be totally unhinged in a article that was flat out disingenuous.
All this 'he is a drug addict' stuff came from like 2 people saying he used sleeping pills sometimes.
So Musk is stepping down as chairman of the board at Tesla, but one thing this doesn't really address is whether he'll remain as CEO. I presume that decision will be made by the new (larger) board of directors?
you never know, the expanded board might actually be suicidal and choose to kill the goose that lays the golden eggs. I don't think they're that deranged, but you never know.
They need a serious executive from a former car company who has experience in quiet, deliberate execution. Lots of companies are making cars without anywhere near the same levels of fanfare.
Lots of companies are making cars without anywhere near the same levels of fanfare.
I don't know much about the auto industry, and don't really follow Tesla, but I do know that Tesla stock is worth almost an order of magnitude more than General Motors.
The stocks aren't really comparable. If you liquidated the companies GM would bring in many times Tesla. Tesla's value comes with a huge risk premium. Tesla was very close to going under a few months ago and it could still do so, if it doesn't execute right.
Do you really believe he couldn't raise 4-5 billion by calling friends at Google who share his vision? He wouldn't want to dilute his holdings, but if push came to shove he'd do it.
I disagree. Musk is the face of the company and the brand. Consumers will be less interested if he's ousted against his will and no longer involved. Tesla might not die, but I don't think they'd be as successful without him.
I disagree. Musk as CEO drove Tesla, against every estimate I've seen or heard of, to be profitable. Prior to musk, the cars didn't exist... So they were unavailable to buy. And I don't see how changing him out will fix quality issues, other than having a future CEO halt innovation in favor of bug hunting... Which would be the start of a quick end for Tesla. They are built on innovation.
> Musk is a great startup CEO. But what Tesla needs now is an enterprise CEO.
I guess that’s the new meme about Musk now, but I see no reason to believe it. Plenty of startup CEOs have done well after their companies became enterprises. Larry Ellison and Bill Gates and Jeff Bezos are obvious examples. So is Steve Jobs, who came back to Apple after a decade of absence and rebuilt the company.
Some have, but what are the numbers on that? Do more handle the switch ok (not even great, but in the "The company isn't going to tank" sense), or do more have problems and need to be replaced, if only for a while?
Many traditional automaker executives are playing catch-up with Tesla with regards to electrification of transport. They're moving second, copying Elon Musk. There is some truth to the idea that Tesla can benefit from the experience of legacy automakers. It is why they have hired people who have such experience. Replacing the founder that the other executives are still in the process of copying though? Kind of crazy.
Especially since Tesla is not just a car company. They are making headway into utility scale energy markets, planning to get into roofing, and have a relationship which will likely help them in the disrupting-the-use-of-roads-as-primary-means-of-transport-by-the-elimination-of-traffic industry that Elon Musk is trying to get set up. It's very safe to say that the status-quo certified executives could still need to continue playing a game of following-the-leader.
While Elon Musk is saying that the only thing that matters is pace of innovation, legacy automaker executives are advocated for on the basis of their relationship with status quo. Tesla doesn't exist in a world with status quo. In a world with status quo, regulators force the automakers to acknowledge the impact of their work on climate change and they grudgingly change course. This has been happening over time. We've seen them faking emission test results. We've seen them producing compliance vehicles so that they have access to markets that are trying to convince them to actually do the right thing.
The reason most people know about musk is because of Tesla not the other way around.
Which is to say that if Tesla hadn’t produced great cars nobody would give a shit about what the guy that started PayPal had to say. He’s famous because Tesla delivered, his so called celebrity status didn’t make the cars popular.
Do you think Tesla could have made it through production hell without Musk? Nobody knows the technical details of Tesla the way Musk does. Nobody would sleep in the factory like Musk does. Who else would have shipped a production line from Europe by air? The dude solves problems and puts out fires and keeps Tesla on the right path like nobody else. People like Elon Musk are not fungible.
The general consensus is that Tesla experienced production hell solely because of Musk. Moreover, their impending cash crunch is also due to Musk rushing through things rather than stepping back for a minute to spend quality time figuring out the details.
People like Musk aren't just replaceable, they should be replaced so soon as possible to lookout the damage they do.
Now that's an entertaining thought. Why not just set fire to all the company's assets right now and be done with it? 'Serious executives' are who you bring in when things are running smoothly and there's not much to screw up. Someone like Elon is needed to get it to a more stable point both product and revenue-wise.
At the very least he is a one person marketing machine making people buy pricy cars by a very new car brand using only his twitter account and his personal brand (and shooting one car at mars).
Quick googling got me a VW ad budget of more than $6 billion. $40 million is nothing compared to that.
"They need a serious executive from a former car company who has experience in quiet, deliberate execution."
Not really.
They need that as a COO.
Tesla has no real magic sauce. They are what they are because of the Musk Hype Machine and his ability to 'inspire' people to move to electric.
If Tesla was based on some magic ingredients that were a real competitive advantage, I'd say let a 'quiet' CEO take over with a hot dog CMO.
But they are still in 'founders mode' wherein the founder is a big factor in inspiring and motivating and that gives him a lot of power.
You might be surprised to know that regular CEO's don't necessarily have all the power you think. They have to convince, fight internal battles, motivate. It's hard for them to do 'big things'.
Musk is becoming a problem but not so much that he needs to go.
He needs a really powerful COO who can go toe-to-toe with him - and he needs to get some f*ing sleep and go back to the 'old' Musk from 2010.
There is nothing a traditional car company CEO would bring to the table that Tesla would need.
All initiatives that Tesla is aiming for needs a visionary workaholic like Elon.
Tesla needs Elon. He is irreplaceable.
My humble opinion is that Tesla without Musk is worth a small fraction of its current valuation. It's a tiny car manufacturer in a world of hyper-competitive giants, and the only thing that kept it afloat is Musk's incredible drive.
I disagree. Musk is to Tesla what Jobs was to Apple. Not in the same way ofc. but in the same sense.
If Tesla lost Musk now it would likely be damaging to the company in similar ways as it was to Apple in the years after Jobs departure in 1985.
I think that's a little overblown. Certainly Musk has his talents but they are not infinite and as we've seen he also brings a lot of disadvantages to the table as well. Not just these outbursts but many other aspects of his management and working style (not just at Tesla but also at SpaceX and going back to PayPal) are incredibly problematic from the perspective of attempting to run a well functioning company.
SpaceX succeeds mightily partly because there are many other forces there to counteract Musk's problems, which doesn't seem to be the case with Tesla. It's also worth noting that Tesla is on a lot shakier ground than many of its fans believe. Tesla's done a great deal to advance the technology of electric cars but the rest of the industry is catching up and Tesla has made some major mis-steps of late (such as with model 3 production). Yes, Tesla would be ill-served by replacing Musk with a typical empty-suit executive, but with a competent and pragmatic leader it would probably be just fine.
My train of thought was that Musk probably wouldn’t have ended up tweeting “funding secured” in a situation where he’d be accountable to an external chairman of the board. A bit of governance might have been useful these past months.
Exactly. It wouldn't have been his place to negotiate, not without chairman approval, and certainly not by himself. There would have been an adult in the room.
It wasn't just Elon who turned that down, it was put to a vote and "More than 86 million shares voted against the proposal at a shareholder meeting in June, while fewer than 17 million voted in favor, Tesla said."
If Musk had come out in favor of the proposal and said: “Yes, it would actually be a good idea to hold Tesla to a higher standard of corporate governance and have someone take on part of my workload, so I’m not going to vote for myself” — do you think he’d be chairman against his will?
> say history is events and people. Electric cars are something every company will have in the next
That's one view of history - popular in common discourse and historians.
Another view of history is that it is largely driven by economics with historical personalities riding on the coat tails of underlying situations with a very few unique genius exceptions (think Newton, Alexander, Ceaser etc). Also remember that most of history has happened when our population has been 1/20th of what it is today - so we are 20x more likely to have interesting characters even if something depends on genius
It remains to be seen what Musk will be - I actually feel underlying economic growth, material science development in battery technology and need to tackle pollution especially in Asia would have anyways driven electric vehicles rapidly and indeed I wonder if Musk jumped the gun on battery giga factory since we're just at the beginning of battery science - but time will tell.
The true heroes - the actual researchers and engineers putting in ridiculously long hours out of pure passion and thereby making the steady stream of breakthroughs necessary to allow new technologies to flourish - rarely get any press or credit.
However, there are circus ringleaders (as Elon has been accused of being), and then there are true polymaths who can both competently direct large scale engineering efforts and deal with entirely disparate realms such as corporate governance, marketing and negotiations. He may not have been getting enough sleep lately, but I think he's more the latter than the former. You don't get put in charge of revolutionary payment systems, luxury vehicles, interplanetary transport and energy storage one right after another purely by accident.
To those downvoting, he didn't accept the previous deal, presumably this one is more to his liking. What other explanation is there besides the SEC giving ground?
This deal is strictly worse than the one he refused. Fines doubled from 10M to 20M, chairman ban increased from two years to three, new communication review process (not in the original deal), and they still have to install two new board members.
Are you joking? A 10m fine vs 20m is totally immaterial to a billionaire. 3 years is longer than 2 but it's clear giving up CEO was unacceptable to him.
You speculated that this deal was more to his liking than the previous one. I was just pointing out how absurd that statement was given that this deal is worse than the other one in every respect.
The plan, as it was negotiated by lawyers, was for Mr. Musk to step down as chairman of Tesla within 45 days and not resume that post for two years. The company, also a party to the proposed agreement, would add two new directors to its board. Mr. Musk and the company would pay tens of millions of dollars in fines, according to the people, who requested anonymity because they were not authorized to speak publicly.
In other words, it’s the exact same deal presented before with some of the penalties increased. There’s no other way to explain it than Musk rejected the real and then realized he messed up when the SEC started with the lawsuit.
You may be confusing the original rejected settlement (no CEO ban) with the complaint that the SEC filed on Thursday (yes CEO ban). The latter is more painful than the settlement offer. It has to be, or there's no incentive to settle.
don't worry about those downvotes...if they want to downvote, then let them downvote...
Just look at those HN karma point votes in the past few years, the upvotes for those really awesome hacking technical articles have been frequently outpaced by those downvotes for those petty trifles...If we take that as a measurement, in a certain aspect, we can see that people's hatred and acrimony grow faster than their kindness and sympathy these days...
so I've stopped worrying about those points...for the knowledge value of their corresponding text, they do not reflect as much as they used to reflect....
The facts in the above post were incorrect. It’s the same deal with worse penalties. The deal Musk rejected was also for stepping down as chairman rather than CEO. In other words, Musk blinked not the SEC.
Why is that? Changes in the board come closer to his formal control of the company a shareholder and owner, so it technically seems like a much bigger intervention.
Is there any way that we could receive similar settlement compensations from the President of the US for his morning tweets? I personally lost a few thousands of dollars due to the sudden stock/cryptocurrency market crash as a result of his tweets in the past few months this year...
I would assume yes, but he wouldn't be eligible for either of the two new independent board seats and can't keep the chairman's seat, so for him to remain on the board would require one of the existing board members to give up their seat to him.
He's lucky. If he were a small time person he would be in jail by now. SEC only goes after low hanging fruit, so you know that this was an easy case for them. Musk deserves it for his stupidity but SEC isn't any protector of the masses by any means.
Honest question: Does it really matter if he loses the chairman role? Or even if he lost the CEO role? If he was busted down to VP of Engineering he would still be a major shareholder and everyone would did what he said right? He just wouldn't have any "official" corporate leader responsibilities (quarterly calls, etc). Or am I totally wrong?
I suspect it would matter, for at least two reasons.
For that to work, you'd need a particular sort of senior management arrangement, not just to leave him alone, but to take a lot of heat for his eccentricities. You need particular people capable of forming unusual understandings for that to work. And there would also necessarily end up being limits - there's only so far folks will cover someone else's bets.
The second reason is Musk's ego. I think he'd find a demotion humiliating, and if he's not treated as a Master of the Universe Superhero-CEO, I bet even money he'd behave worse, pick fights with his minders, etc.
Research what he did when he was fired as CEO of PayPal. He made sure the company had good management by making sure Peter Thiel came back (even though they weren't the best of friends at the time), and he stayed quiet, allowing the team to execute and make him rich. Now that you know this, will you update your beliefs about his ego?
Perhaps it's more accurate to say he's driven, no nonsense and shrewd?
Yeah. Of course he wears his ego proudly. You don't rise to that level without above average chutzpah. But I think that's more a side show than the featured event.
Elon Musk should not have said what he did, but advocating for sodomy is not critique. Some cultures have the death penalty for sodomy whereas the acceptance of critique is celebrated as wise in most cultures. The character flaw of the news is that in cases like this, it does not seek to create a peaceful resolution between the two parties, but instead blows up their differences as much as possible. Both of these men tried to save the lives of kids.
I agree that Twitter censure is likely to be of benefit to Tesla. Starving the news of Elon Musk content is a good thing. It will hurt the profits of attention-derived news. Plus, the doom of the ICE industry is rearing its head. So they can talk breathlessly about that and criticize the existing auto manufacturers for not seeing the writing on the wall once they figure out a new strategy to maximize their attention derived profits. I'm cynical enough that I figure this story shift will probably happen around the time that Tesla starts taking out television ads.
Wu... wut? "Advocating for sodomy is not a critique" ???
What Elon did:
> Elon Musk has escalated his baseless attacks against a British diver, claiming without evidence that the man who helped rescue children from a cave in Thailand was a “child rapist” in an email to a reporter. [https://www.theguardian.com/technology/2018/sep/04/elon-musk...]
Yeah, the news doesn't really bother giving the full story with much subtlety. You can go look up what the guy actually said. There is a video of it. Basically, he figured that Elon Musk was trying to help just to look good with no substance behind the action. So he told Elon Musk he should shove the submarine that they (SpaceX team) built up Elon's ass. Pretty poor showing all around.
Makes for a great story though. Much outrage. The madder you are, the more irrational you have become? The better. Many clicks. Much profit. Much circus. Totally get why the reporter violated the principle of off the record conversations in order to earn themselves money and create drama. People make money, because you just linked this article. That is how this works. This is how social media generated news tends to make its money. If the story didn't outrage you enough for you to share that link with me? They failed.
But don't let them delude you into thinking its in the best interest of either party being reported on to be known for their worst moments. Nor for the public opinion of both people to be shaped by these moments. Both of these people tried to save the lives of children. The character of both people are very likely to be somewhat congruent with that. I presume innocence until shown otherwise with regard to the accusations leveled. It isn't a story of interest to me without evidence which backs it. I refuse to join either mob.
A corollary of this is for-pay news cares more for its readers than free news. You ought to pay for your information, if you want to incentivize getting good information.
Saying "shove it up your ass" is a common idiom that is, while rude, not "advocating for sodomy".
(Which, by the way, is something that is generally A-okay - "sodomy" refers to gay (usually anal) sex, and Western societies have generally decided that's not a crime anymore.)
Wow, okay. This is still an incredibly bizarre point:
>Some cultures have the death penalty for sodomy whereas the acceptance of critique is celebrated as wise in most cultures
Anyway, he actually said Elon Musk to "stick the submarine where it hurts" and called it a PR stunt. Elon then responds with this tweet, which I think is relatively appropriate:
And a series of other tweets doubling down on the sentiment. This is insane and depraved. You can argue that this is all inflamed by the media, outrage culture , etc, but at the end of the day, the CEO of a hugely popular tech company took to twitter (where he has 23m followers) to spread vile and baseless accusations about someone.
He made these tweets originally and publicly in JULY. It was only recently (and after apologizing) that he REPEATED the accusations to Buzzfeed news. And the buzzfeed reporter also preempts your accusations that the emails were leaked improperly ("He prefaced the email with "off the record" though I did not agree to that condition. Off the record is a two-party agreement.")
> Both of these people tried to save the lives of children
Yah, sure. But one of them also took to their social media and their millions of followers to accuse the other of being a pedophile, and then repeated the accusation, and then apologized, and then REPEATED the accusation again months later. With no proof. And so Musk can both be someone who tried to save the lives of children and a piece of garbage who is prone to emotional outbursts that can do real damage to real people.
Yeah, bad way to make my point. I know that there is very clear adversarial search for and an adversarial amplification and adversarial provocation of all Elon Musk's flaws. This amplification involves a game of telephone in which their is mounting outrage which turns 'shove it where it hurts' into 'dared to critique the proposed engineering solution'. I'm trying to introduce reality again in the hope of stopping the mob mentality death threats toward Unsworth and the harming of the mission of electrification of transport. People are intentionally trying to help feed this system, to see what happens [1]. I've seen enough of what happens to know this is a bad idea.
Pretty sure the right thing to do is let the conversation die. Due process will bring much more justice than social media amplification.
I think you are trying too hard to defend Musk. There is (to me) an immeasurable difference between "shove it up your ass" (which is telling Musk to do something), and "you are a paedophile" (which is saying the diver is a something, for which in almost every country in the world you would go to prison for). He then repeated the accusation, repeatedly, saying he is sure it is true.
The guy is now suing Musk, which really is (in my opinion) his only choice, as otherwise many people might assume the accusation is true (as Musk is so sure, and even asked why he wasn't being sued as a response)
> There is (to me) an immeasurable difference between "shove it up your ass" (which is telling Musk to do something), and "you are a paedophile" (which is saying the diver is a something, for which in almost every country in the world you would go to prison for). He then repeated the accusation, repeatedly, saying he is sure it is true.
> The guy is now suing Musk, which really is (in my opinion) his only choice, as otherwise many people might assume the accusation is true (as Musk is so sure, and even asked why he wasn't being sued as a response)
I still don't see how that really applies. I agree that Musk is subject to a lot of scrutiny, and a lot of negative coverage in general. But in this case, he is absolutely in the wrong, and what he did and continues to do is despicable. This wasn't a case of the media taking his statements out of context or misrepresenting his views, and it's disingenuous to try and roll this event into the category of 'unfair media sensationalism'.
Tesla wouldn't exist if Musk took "advice from people he doesn't agree with". It's easy to point to model 3 production but what about all the other instances he has proved the nay sayers wrong? Entrepreneurs are generally not people who take advice from people saying it can't be done, instead they prove it to themselves.
> You can draw a very short dotted line to all the automation they eventually had to rip out of the Model 3 production line.
Given his large-scale visions, I suspect the attempt at extreme automation was intended as a proof of concept about fully automated manufacturing for off-planet use.
Yes, that's the gist I got out of his behaviour at X.com when they merged with Cofinity as well (from the book The PayPal Wars). He wanted to turn it into a full Microsoft shop, and and he wanted to change the name to X. To sum it up: people disagreed, and there were setbacks after setbacks with the former. When he put through the latter, there was a small internal struggle and Peter Thiel become interim CEO.
Everything I could find says the board asked Thiel to come back, not Musk... In fact, supposedly they fired Musk and hired Thiel back while Musk was flying internationally, and had announced they change at CEO before he landed.
Knowing that, it would explain his tendency to make sudden pronouncements and try to stay at the office/factory at all hours.
Went back to the sources, and it seems you're right on the Thiel thing. He did make peace with Thiel and Levchin pretty fast though, and even invested more money into paypal after he was kicked out (citation: the Ashley Vance book on Elon) which was my main point -- he didn't blow shit up or incite a rebelion, he just stayed on the sidelines and supported the team like a trooper.
You made two separate points, and the one you lead with was that he recruited Thiel after being fired... which isn't true. Also, "not blowing shit up" especially when he has money involved != 'staying on the sidelines and supporting the team like a trooper'.
Not the OP but having followed Musk for a long time, I think his ego is enormous and that PayPal anecdote doesn't change that. Few people are more sensitive to criticism than Musk.
It would matter if there were someone else in the company in a position of higher authority who could say "no" to something Elon wanted to do, even if it only happened rarely.
You'd get into even more trouble with the SEC if you ran a public company where the executives and officers are not what you claim they are but are stand-ins for someone else.
There are specific things that are the role of the top level executives, like certifying the company's SEC reports. But I'm not sure how having someone other than Musk independently and competently do those things would be expected to hurt anything.
Meanwhile, wouldn't it be completely normal and legitimate for a company to give the VP of Engineering or Operations a free hand in making engineering or operations decisions?
This. Tesla is a publicly traded company. It makes clear, legally-binding representations of who its officers are and what its organizational structure is. If Tesla represents that Musk is not longer a chairman, while in fact he is, then that's (again) investor fraud.
The Chairman role is largely symbolic. I seriously doubt that if he gave it up, it would reduce his work load.
EDIT: largely. In a company like Tesla, with such a strong CEO, the Chairman would be a symbolic role. In a very large and sprawling company (PepsiCo?), it wouldn't be so symbolic.
> In a company like Tesla, with such a strong CEO, the Chairman would be a symbolic role.
In a company like Tesla, that has been sanctioned by the SEC for failing to adequately control the public actions of the still-current CEO, it's unlikely that the Chairman would be a symbolic role.
So he made one big mistake. He's done a lot of good stuff. He was punished, he's done a lot of good for the world. Compare him to the heads of banks and financial orgs in 2008, people doing credit default swaps,, the entire financial world that takes a cut out of most transactions for no good readon, like ipos. He's a huge net positive for the world.
I don’t think the point of the comment is at all related to what Musk has or has not done, nor his value as CEO. The point was that after a public censure of a CEO and company, the subsequent Chairman would be expected to work towards preventing a similar situation and would have the authority/mandate to do so.
There's nothing only about owning 20% of a public company.
20% and the largest shareholder, is more than enough to turn any public company inside out. Hedge funds do it all the time with dramatically weaker positions of single digit ownership. Carl Icahn routinely does it with a few percent. It's an immense position in the public markets in terms of wielding power.
He will still be the most powerful single person at Tesla, but this at least opens the door for him to not be the most powerful entity at Tesla. There is no way of knowing when or even if the Tesla board will start saying no to Musk, but this at least makes it possible for them in the future. That is a good thing in my opinion.
In fact, I think a Tesla shareholder should be pretty happy with this settlement. The $20m fine at a time when Tesla is already running low of cash is certainly tough news, but every other part of this settlement is probably good news for the company's long term health. It is also obviously a lot better than some of the punishments people were talking about earlier this week.
For those wondering why, look at the comments elsewhere in this discussion about how the $20mm owed by Tesla will cause them to run out of cash sooner.
I don't know the terms. I'm assuming that this is a new issuance at the current market price and thus would effectively provide $20 million of additional liquidity to counteract the cost of the settlement.
Assuming he is buying newly-issued shares from Tesla, then the money goes directly into their treasury. So, the company will have $20MM more in cash than it did the day before.
If it's newly issued the price will be dilution of the other shareholders stock. I guess it's a smallest burden on Elon and the rest of the shareholders.
I'm no finance person, lawyer, or anything like that. But I suspect that he can't just give Tesla money and it has to be in exchange for something, such as stock.
I meant "covering" in the context of the parent commenter's concern about cash flow. He's not donating the money to Tesla, but he's preventing the fine from making their cash flow worse.
Interesting excerpt from that NYT article - "The terms of the settlement are slightly tougher than those that two people briefed on the talks said Mr. Musk had rejected on Thursday, which called for a two-year bar on serving as chairman and a $10 million fine."
I'm a Tesla shareholder and I'm extremely hopeful, an independent chairperson could really cut down on the nonsense that makes the company off-putting to some investors. Just as Google needed an adult in the form of Eric Schmidt, Tesla needs someone who can collaborate with Musk. Eric Schmidt would be perfect but he's probably conflicted out because of Alphabet's Waymo. Though I'm hopeful that they'll find someone who can help Musk achieve goals and instill some discipline and sternness where needed.
However, it could go awry. If the independent board member were to try to combat Musk and get the company wrapped up in internal struggles, it could go badly for the company.
> I think a Tesla shareholder should be pretty happy with this settlement. The $20m fine at a time when Tesla is already running low of cash is certainly tough news, but every other part of this settlement is probably good news for the company's long term health.
Hi there. More than 1/4 of my net worth, and over 1/2 of my equity holdings are in TSLA. I agree with every word of this. The $20M hurts, but on net, I think this is better for Tesla than if Elon had won the lawsuit.
You do you, but having 1/4 of your net worth in any company is extremely risky and ill-advised. I hope it works out for you, but I also really hope you diversify your portfolio.
I mean it's the most generic advice you can give. Maybe he enjoys believing in a single company and taking risks. Maybe he's totally fine even if he lost it all. People spend more than 1/4 of their net worth's on hobbies, but suddenly if you have 1/4 of your net worth in a single company it's a disaster and you are crazy.
Maybe he invested 2% of his net worth in Tesla at the IPO, was determined to hold the shares for at least 10 years until they executed on their vision, and has been too stubborn to sell until now.
Re-balancing your portfolio after things have started to go very, very well is certainly sound advice, and so is selling all your equity in a promising startup the moment it has significant market value (it will most likely still be worthless).
Yeah, this is closer to how I got here (cost basis is way more than 2%, but nowhere near 25%). As you hint at though, there's a cognitive bias in holding my position by this reasoning -- my gains are a "sunk benefit" and I am where I am regardless of how I got here.
For me, it boils down to two things:
1. I'm pretty conservative with the rest of my money (index funds, rental property). If Tesla went bankrupt tomorrow, I'd be fine. Don't get me wrong -- it'd be a bad day. But the financial hit wouldn't threaten my long-term happiness.
2. I only buy individual stocks when I feel the market has wildly misjudged a company. Tesla fit this to a tee, particularly (but not exclusively) in the early days. I took a large early position and have been buying dips along the way (yes, still). By my judgment, a dollar invested in Tesla still has a much higher expected value over 10 years than a dollar invested in any other equity that I feel qualified to assess. I would love to diversify the highly aggressive part of my portfolio, but hard as I try, I cannot find a deal this good in any other public company. So I've decided how much I'm willing to lose on what I believe is a great bet, and have invested accordingly.
Came to echo this sentiment, though don't know how old you are, and if in fact you are being 100% truthful. Having that much in a single highly risky company under intense conditions is not a sound investment strategy. Rolling the dice, just know the risk.
I'm being 100% truthful, but I recognize that saying this doesn't establish any additional credibility. :)
I didn't mean to make this about me or my investment strategy. I was just trying to back up the sentiment that the poster above me expressed -- that people with skin in the game will see this settlement as a great thing for Tesla. I have a lot of skin in the game and that's exactly how I feel.
> More than 1/4 of my net worth, and over 1/2 of my equity holdings are in TSLA.
No offense, but why???? It is crazy to have this much of your meet worth in ANY single company. I can only hope that you are independently wealthy and if TSLA went bankrupt (of which there is a very large possibility) that you'd be ok.
If your earnings are likely to go up dramatically later, then it's fine to take large risks with the money you can invest now. Unless you have large gains, it's not enough money to make much difference anyway.
This assumes of course that you've got the basics covered, like being out of debt and having some kind of emergency backup (savings, insurance, well-off parents, etc).
What the others already said; also, I am reminded of Enron and the stories almost 20 years ago of people being wiped out due to the Enron collapse. My internal reaction at the time was "diversify a little."
Due to the volatility and the extreme short interest, those puts are quite expensive, and have been for years ;) You could certainly buy out-of-the-money options at 50% of the current market cap expiring in the next quarter, and been doing so regularly during the last five years during which Tesla's prospects have seemed quite dodgy.
But it would have more or less have wiped out your upside. So if that's the insurance you would have liked for such a risky investment, it would have been better to just invest in something else.
I was thinking that one might partially cover (e.g. buy puts for 25-50% of the value of their portfolio) but you're right. the risk premium should be exactly equal to the expected profit on the asset, if the world works the way theory predicts.
Just FYI, but when you hedge with puts your holding period to realize long term gains instead of short term gains gets reset immediately, then you have to wait another year after you close the put position before you can sell as long term gains. Just something to keep in mind.
You are right. In most public companies, it would matter greatly since the chairman is the most powerful person in the company ( CEO reports to the chairman ). But as you noted, musk is the largest shareholder, but more importantly other large shareholders ( especially the institutional shareholders ) back him. So he would be in charge regardless. But removing him from the chairman is optically damaging, so it's not insignificant. It matters, but not as much as it would normally.
The chairman has the power to appoint members of the board, the board has the power to fire the CEO. So someone who's both chairman and CEO is virtually impossible to fire.
The combination of removing Musk as Chairman and adding two independent directors means there's a slim chance that he could eventually be fired – more likely, it means that Musk will be held more accountable to the board.
> Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
Well, the stock has done somersaults in all directions since then (benefiting both longs and shorts.) I wonder who would be eligible for part of this payout.
There are some crimes that are so blatant, public and obvious that the regulators _have_ to punish you, as any other option would make it look like the regulators were so ineffectual and weak there were effectively no rules.
Filing public charges requesting his removal as CEO even though they weren't seeking that in the settlement seems like a calculated move to maximize the impact to the share price and thereby force a quick settlement. It was evidently effective, but it was a hell of an expensive way to win if you're measuring winning in terms of protecting investors. Anyone who got stop loss'd out of their shares has a right to be displeased.
it was a hell of an expensive way to win
if you're measuring winning in terms of
protecting investors.
Not at all. The SEC is thinking not in terms of this one crime, but in terms of the hundred CEOs who will feel tempted to commit securities fraud in the future, and the hundreds of thousands of investors who will fear such fraud.
Will they think "Remember Elon Musk, he got his ass kicked at high cost to himself and his investors, nobody does it" or will they think "Remember Elon Musk, he did this and got away scot free, everyone does it" ?
That's the choice facing the SEC, and for obvious reasons they chose the former.
> Not at all. The SEC is thinking not in terms of this one crime, but in terms of the hundred CEOs who will feel tempted to commit securities fraud in the future, and the hundreds of thousands of investors who will fear such fraud.
The deterrence argument can be used to justify anything. Why don't we behead the entire families of petty thieves? Think of the millions of other thieves who would be deterred.
It's a false dichotomy. The choices aren't "scott free" or "nuclear option" -- if their case was as strong as is being assumed, all they would have had to do is ask for what they got in the settlement and then get that in the proceeding. It wouldn't even remove the incentive to settle because that still allows them to avoid a determination of guilt.
They could also have just given the settlement negotiations more time before making a public charge to begin with. Give the other side's lawyers a chance to explain things to their client for a while first.
Richard S. Fuld Jr. and Lloyd Blankfein played significant part of causing US households to lose 14 trillion dollars. There were zero consequences. Musk caused a blip in the value of a tiny 45B market cap company and is crucified for it. Smthng.
It seems irrelevant but it's actually really significant. The board of directors is back in charge. Though shareholders currently massively back Elon, there is no guarantee it will always be that way.
The news of the SEC investigation seems to be the cause behind the stock's recent drop from $307/share to $270/share, though; if I'm doing the math right, that 12% translates to ~$6.3B worth of value. Kylie Jenner's tweet "only" erased $1.3B of stock value. So, I think Elon has her beat.
That still doesn't seem to be enough to be the most expensive tweet, though. That honor seems to be this tweet[1], where a finance firm "Selerity" tweeted Twitter's missed earnings report prior to Twitter really announcing it, costing Twitter ~25% or $8B. (The earnings report was uploaded early to the investor relation's page on Nasdaq, apparently, and it showed that Twitter missed its earnings.)
Selerity tweeted content that was already posted on Twitter's IR site. That $8B was likely to evaporate the following day anyway. (Weather forecasters who predict a hurricane don't cause the billions in hurricane losses either.)
Social media gaffes of the "optional" variety (Kylie, Elon, Roseanne) are a different category IMO.
I follow this stuff pretty closely and I haven't seen any mention of him making a stand and saying he'd never settle. All I've seen is an article referring to "sources" that said he or his team rejected a specific settlement. Can you point me to your source for the claim that he'd never settle?
Musk reportedly refused to sign the deal at the last minute because he felt he would not be truthful to himself and wouldn't have been able to live with the idea he'd agreed to accept a settlement and any associated blemish.
Ok, so this is an article referring to some other reporting, which was somehow sourced itself. Suffice to say that factoid should come with significant uncertainty attached.
Elon games the system. Puts his brother in the cosmetic role of board chairman, pays $2500 (in regular folk equivalence) and appoints two faux independent directors.
light slap on the wrist, a gentle speedbump, back to same.
Which is really all that was needed anyway. The whole idea of forcing him out as CEO, issuing a ban on being a CEO/Director of a public company, etc., was pure over-reach from the beginning.
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[ 1.8 ms ] story [ 351 ms ] threadEdit: 20 mil for Musk, 20 mil for Tesla.
In fact, they’ll make a lot of money by removing the uncertainty.
I'll give you one hint: the only world leader that has been laughed at openly by the UN general assembly.
Most of his net worth is likely tied up in stock. Which he can’t exactly sell.
You can also negotiate a payment plan with the government, depending on your financial situation.
Larry Ellison has a $11B line of credit leveraged against 30% of his Oracle shares. This is a non-story.
Sure he's not gonna sell all his stock... but in this particular case, it feels like a distinction without a difference.
People in his position often borrow against assets via credit lines or similar instead. He's carrying an $890m misc liability in his wealth analysis by Bloomberg (13.8m shares pledged against personal obligations).[1] That's Musk borrowing for any variety of expensive life purposes (such as putting $100m into the Boring Company), specifically so he doesn't have to sell equity. An obviously slightly risky move when SpaceX is private and Tesla is volatile and unprofitable.
Larry Ellison as one famous example, had a large credit line against his Oracle stock and used it to buy real estate, live lavishly etc. Eventually the liability got big enough - several billion dollars - his accountant strongly encouraged him to pare it down and go on a budget. Ellison though now receives $500m+ per year in dividends from Oracle, and has since wiped out the large liability.
[1] https://www.bloomberg.com/billionaires/profiles/elon-r-musk/
It's kind of bizarre how $1000 is an entire household's expenditures for an entire month in many countries..
> Settlement Requires Musk to Step Down as Tesla’s Chairman; Tesla to Appoint Additional Independent Directors; Tesla and Musk Agree to Pay $40 million in Penalties
> Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
I don't think so. He was in much more risk before, with SEC investigation. The accuser in civil suit is asking for $75k worth of damages. I think Musk can pay off that fine and be free from it. I guess there will be no jail time. Although, i'm not a lawyer.
As I said, beyond that suit, i.e. the suits he’s facing over the tweets. And the DOJ investigation.
this is a much better settlement and easier to swallow.
if he had to admit it then the criminal charge would have been emboldened. unfortunately the settlement itself can still be used as ammunition, but it is contains no admission (or denial) of guilt.
Most likely Musk wanted the optics of declaring himself innocent, rejecting the offer and feigning a fight. I'd be surprised if everyone around him have not been encouraging him to settle, the downside risk was far too great vs the modest settlement pain.
[1] https://www.cnbc.com/2018/09/28/teslas-musk-pulled-plug-on-s...
Elon will learn a hard lesson, there will be a committee and procedures to control his communication channels. He will still be CEO and the spirit of Tesla will be unharmed in the long run.
As much as I see myself as an objective person, Elon is genuine in his passion and his vision. Derailing him to jail time or prison would be a net loss for humanity, however objectively and legally inconsistent it may be.
Edit: The news cycle and PR things have a very short term memory. Just a year ago, people were praising him for his style and overall he was considered an extraordinary leader, CEO and a visionary.
I am very skeptical of this given Musk's recent Twitter behavior (even after the initial Tweet which started the incident).
> Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications;
I feel this reliance on Musk as a face of the company is increasingly the biggest selling point of the company, which will be unhealthy in the long run.
Warren Buffett doesn't compose his letters to shareholders in 30 seconds from his cell phone while he's on the toilet. He probably runs them past a handful of people and waits a few days to look at them with a fresh pair of eyes before he sends them out, like a college student would with their thesis.
This is normal CEO behaviour.
This was never remotely a concern. The most severe punishment sought was barring him from being a director or CEO of a public company. They settled on a paltry fine and Musk can't be chair. He's still CEO, he's still on the board, and the fine is less than insignificant.
Honestly losing access to his Twitter account is probably the most severe.
DOJ is responsible for charging Musk with a crime not the SEC.
And it could still happen.
Musk is talented at start-ups but has been a disaster at running scaled up companies. His risk taking on Model 3 assembly line automation nearly sunk Tesla and could still do do. BFR could sink SpaceX, it's a rocket for Mars colonization without a customer.
I'm a huge fan of his accomplishments but the risk taking coupled with the erratic behavior is too much. His boards should kick him out.
I feel like a lot of recent hate has to do with his erratic behavior in recent year. But, lets just look back at 2017 - everyone was praising him for his leadership.
A few PR incidents and now all of a sudden he is incapable as a CEO?
I hate this perspective. As a member of humanity, I want everyone to face equal justice, no matter how pivotal to a particular project or movement they may be. There will always be more visionaries.
Anything else will eventually and inevitably lead to violence.
Elon needs someone to act as a brake from time to time. Like shotwell at SpaceX..
Not sure why people downvoted my question, it's an interesting line of inquiry. Maybe they don't know their history.
Of course, it might be that his tweets are being considered in the larger context of recent irresponsible tweeting by those in power, and thus from the perspective of enforcement it looks like a rising tide.
The SEC are there to protect the integrity of the market. Things like fraudulent information, insider trading, etc are corrosive to the mechanisms which a well functioning market requires.
Maybe there should be a bias towards those who benefit from the continuing viability of the company and maybe not.
But in this case, I suggest it's moot just because the damage to longs appeared to be significantly greater than the damage to shorts and it doesn't counterbalance anyway.
The penalties seem arbitrary to me. Transferring several million (or billion) dollars around as they are doing doesn't seem to rectify in any way the purported injustice to shorts. The whole episode drove down the stock quite a bit, so longs have suffered a lot, shorts have suffered somewhat, and the government collected a commission. Nobody has had wrongs rectified, and it's unknown whether prying Musk away from Tesla is a net gain.
Personally, I was neither long nor short TSLA at the time of the tweet, and I don't think short sellers are inherently illegitimate. However, I think the existence of a public company generally serves a social purpose and long investors are not quite symmetric with short investors. If, in general, there is a dispute where you can apply long investors' concept of fairness, or you can apply short investors' concept of fairness, it kind of makes sense that what damages the company less is probably the right answer, barring something like Theranos that shouldn't exist at all.
I don't think it follows that what harms longs benefits the shorts that were harmed by Musk's tweets. So there is no benefit to compare to the harm done by the enforcement.
Unless you think that reducing Musk's role in the company will lead to the downfall of the company and that is a good thing because someone will profit, which seems like a weird idea to me.
By analogy, if you borrow a car, and your interests seriously conflict with the owner, then probably for the good of society, and the rental market, there needs to be protection of the owner's rights.
At the same time, it seems these days that there are so few people really working for the advancement of humanity to the extent that Musk is. (And just to try to abort the inevitable replies: yeah, I get that he isn't a saint, and yeah, he's done some pretty stupid, ugly, awful things.)
You're right that there will always be more visionaries, but the ones that are capable of executing grand visions that improve humanity seem to only roll around once a generation or so. They absolutely shouldn't be given a pass for terrible behavior, but I hate to see society so eager to tear at them, too.
But jail time for a random tweet seems like overkill, and removing him from Tesla for this does feel like it would be a net negative. He was heavily fined, which seems more fair.
Yeah, it isn't like he was out there randomly accusing people of being pedophiles or anything.
Because Tesla told everyone to treat his account as a corporate mouthpiece:
https://www.cnbc.com/2018/08/08/reuters-america-update-7-u-s...
"Tesla alerted investors in a 2013 SEC filing that they should follow Musk's Twitter feed for "additional information" about the company."
e.g. Google was alleged to have illegally issued options to their employees back in 2004 by the SEC. If they prosecuted Google's board and officers with maximum penalty in a federal court (and the court allowed such nonsense), then both Larry and Sergey (and a bunch of executives) would end up with 5-year prison sentences before Google had a chance to go IPO. But such a course of action is obviously not in public interest - the amount of damage to investors and the public in general caused by the remedy would far outweigh whatever irregularities in option grants that Google committed.
And btw, the same securities laws also apply when you open a startup and raise funds or issue options. It's not "Oh but Google is rich and I'm poor these laws won't hit me". Quite a number of securities law violations don't require intent. A single filing error by your lawyers can mean you're already in violation (and, years in prison if you use the maximum penalty) - even if you're just a tiny startup with $100k.
Both prosecutors and courts have always been walking a fine line on what's considered fair for each particular circumstance. It's how it has always been.
Using your own example, he was basically saying that if someone with "a tiny startup with $100k" was guilty of the same crime, he should face the same penalties as Musk.
Tell that to muslims.
I agree, but why has punishment and enforcement become so utterly derailed from reality or just.... basic morality?
They went after Musk hard because it was a trivial slam-dunk no-effort case. For a tweet.
Then you look at truly evil people who have committed acts of outright fraud who walk due to simply playing the game the government wants you to.
So while I agree with your point, I have very large reservations with current enforcement institutions. Go after a high-performing unconventional guy like Musk who actually accomplishes things with the entire weight of the federal government - but let the parasitic bankers who caused actual damage with outright fraud in the real world completely skate because prosecution would have actually taken work and been career risky.
My limited experience with the enforcement arms of the federal government simply affirmed this point of view. They only care about themselves and their personal careers, and could care less about actually protecting the people or even remotely attempting to find justice.
But if you tweet something that harms some wealthy short sellers there will be hell to pay within weeks.
Yes, this is hyperbolic and could be articulated better - but it's been something I've been chewing on now for decades.
I have nothing against Musk but this is an awful argument. You are simply not in a position to opine on what is a net gain or loss for humanity, so you're arguing that we should make decisions based on the best imaginable future outcome because he already has some notable achievements. Without commenting on the guy at all, please just reflect that almost any wealthy business person has a PR team that not only highlights the person's positive qualities, but works hard to disseminate those opinions in public to maximize the value of the person's reputation.
Edit: Not brevity, wrong word.
I mean, not many people refer to Hulk Hogan as Mr Bollea, or Madonna as Ms Ciccone. But you might refer to Obama as Barack Hussein Obama if you want to draw attention to the fact his middle name sounds like a middle-eastern dictator.
If jailing someone who has committed fraud is a loss to humanity, then I am glad not to be part of it.
The amount of circle-jerking and asshole-worship has gone through the roof here. I mean, yes, after Steve Jobs, some prople need someone else to satisfy their dick-sucking urges, but come on! There has to be a limit to it.
His ego has gotten out of control. He started to believe his own press. It seems to be human nature. Oh ya, we have a word for it, hubris.
With all his reading you would think he would have learned from other's mistakes.
The number one criterion for a functioning democracy is a reliable and consistent application of the law to everybody without exception. Declaring that somebody should be above the law is a very dangerous path.
Interesting to note specifically the point about controls on his Twitter account that could’ve prevented this.
There’s been persistent rumours of serious drug use. His outbursts are erratic and unhinged ie. calling a diver a paedophile on multiple occasions. His private life is extraordinary for a CEO to say the least. He clearly lacks self control ie Twitter and Joe Rogen show. And his I’m the victim attitude towards short sellers, media etc is pretty unparalleled.
I suspect that losing the Chairman position is the last step before being removed as CEO.
I am not saying his public statements were bad. Just trying to put some perspective. Also, smoking marijuana is ok and legal. He took a puff and all of a sudden he is a drug addict. WTF!?
Just watch his interview Salman Khan (Khan academy) or look up his accomplishments.
It is illegal on a federal level. And as someone who runs a company with multi-billion-dollar National Defense contracts, which are almost certainly contingent on him holding a security clearance, it shows an incredible lack of judgement to consume marijuana publicly.
You mean to say illegal.
https://m.youtube.com/watch?v=qGeZnLoGGkA
https://m.youtube.com/watch?v=YlYpGqPjqTY
All this 'he is a drug addict' stuff came from like 2 people saying he used sleeping pills sometimes.
They need a serious executive from a former car company who has experience in quiet, deliberate execution. Lots of companies are making cars without anywhere near the same levels of fanfare.
I don't know much about the auto industry, and don't really follow Tesla, but I do know that Tesla stock is worth almost an order of magnitude more than General Motors.
TSLA ~$45.5B
GM ~$47B
And you can be an enterprise CEO and still innovate as a company eg. Apple, Microsoft, Mercedes-Benz.
I guess that’s the new meme about Musk now, but I see no reason to believe it. Plenty of startup CEOs have done well after their companies became enterprises. Larry Ellison and Bill Gates and Jeff Bezos are obvious examples. So is Steve Jobs, who came back to Apple after a decade of absence and rebuilt the company.
I get what you're saying, but choosing from "business as usual" automotive industry leaders has a spotty track record.
Particularly where innovation is concerned.
Especially since Tesla is not just a car company. They are making headway into utility scale energy markets, planning to get into roofing, and have a relationship which will likely help them in the disrupting-the-use-of-roads-as-primary-means-of-transport-by-the-elimination-of-traffic industry that Elon Musk is trying to get set up. It's very safe to say that the status-quo certified executives could still need to continue playing a game of following-the-leader.
While Elon Musk is saying that the only thing that matters is pace of innovation, legacy automaker executives are advocated for on the basis of their relationship with status quo. Tesla doesn't exist in a world with status quo. In a world with status quo, regulators force the automakers to acknowledge the impact of their work on climate change and they grudgingly change course. This has been happening over time. We've seen them faking emission test results. We've seen them producing compliance vehicles so that they have access to markets that are trying to convince them to actually do the right thing.
So yeah, I'm in total agreement with you.
Which is to say that if Tesla hadn’t produced great cars nobody would give a shit about what the guy that started PayPal had to say. He’s famous because Tesla delivered, his so called celebrity status didn’t make the cars popular.
Or did he jump in as CEO after Tesla became popular?
People like Musk aren't just replaceable, they should be replaced so soon as possible to lookout the damage they do.
Could that be because almost all of those other cars are utterly unremarkable?
Not really.
They need that as a COO.
Tesla has no real magic sauce. They are what they are because of the Musk Hype Machine and his ability to 'inspire' people to move to electric.
If Tesla was based on some magic ingredients that were a real competitive advantage, I'd say let a 'quiet' CEO take over with a hot dog CMO.
But they are still in 'founders mode' wherein the founder is a big factor in inspiring and motivating and that gives him a lot of power.
You might be surprised to know that regular CEO's don't necessarily have all the power you think. They have to convince, fight internal battles, motivate. It's hard for them to do 'big things'.
Musk is becoming a problem but not so much that he needs to go.
He needs a really powerful COO who can go toe-to-toe with him - and he needs to get some f*ing sleep and go back to the 'old' Musk from 2010.
SpaceX succeeds mightily partly because there are many other forces there to counteract Musk's problems, which doesn't seem to be the case with Tesla. It's also worth noting that Tesla is on a lot shakier ground than many of its fans believe. Tesla's done a great deal to advance the technology of electric cars but the rest of the industry is catching up and Tesla has made some major mis-steps of late (such as with model 3 production). Yes, Tesla would be ill-served by replacing Musk with a typical empty-suit executive, but with a competent and pragmatic leader it would probably be just fine.
Would have saved $40M cash and billions in shareholder value if he’d taken the hint then. Nobody should think themselves that irreplaceable.
It’s very clear what the SEC has done. Which is send a warning sign that this is Musk’s last chance before he is fired.
I don’t think they wanted to punish him any more than that.
https://www.reuters.com/article/us-tesla-musk-blackrock/blac...
Leadership is key. I dont like Elon's propaganda machine which IMO is what feeds his cult status, but HE is the reason Tesla is a thing.
Believe in Him. Tesla as a company has no chance against GM or Ford. Elon has a chance because of what he has accomplished.
They say history is events and people. Electric cars are something every company will have in the next decade. What company is going to get an Elon?
source?
That's one view of history - popular in common discourse and historians.
Another view of history is that it is largely driven by economics with historical personalities riding on the coat tails of underlying situations with a very few unique genius exceptions (think Newton, Alexander, Ceaser etc). Also remember that most of history has happened when our population has been 1/20th of what it is today - so we are 20x more likely to have interesting characters even if something depends on genius
It remains to be seen what Musk will be - I actually feel underlying economic growth, material science development in battery technology and need to tackle pollution especially in Asia would have anyways driven electric vehicles rapidly and indeed I wonder if Musk jumped the gun on battery giga factory since we're just at the beginning of battery science - but time will tell.
However, there are circus ringleaders (as Elon has been accused of being), and then there are true polymaths who can both competently direct large scale engineering efforts and deal with entirely disparate realms such as corporate governance, marketing and negotiations. He may not have been getting enough sleep lately, but I think he's more the latter than the former. You don't get put in charge of revolutionary payment systems, luxury vehicles, interplanetary transport and energy storage one right after another purely by accident.
Is it? I thought the other settlement included Musk not being able to lead companies for two years:
https://www.marketwatch.com/story/elon-musk-rolling-the-dice...
The plan, as it was negotiated by lawyers, was for Mr. Musk to step down as chairman of Tesla within 45 days and not resume that post for two years. The company, also a party to the proposed agreement, would add two new directors to its board. Mr. Musk and the company would pay tens of millions of dollars in fines, according to the people, who requested anonymity because they were not authorized to speak publicly.
In other words, it’s the exact same deal presented before with some of the penalties increased. There’s no other way to explain it than Musk rejected the real and then realized he messed up when the SEC started with the lawsuit.
Just look at those HN karma point votes in the past few years, the upvotes for those really awesome hacking technical articles have been frequently outpaced by those downvotes for those petty trifles...If we take that as a measurement, in a certain aspect, we can see that people's hatred and acrimony grow faster than their kindness and sympathy these days...
so I've stopped worrying about those points...for the knowledge value of their corresponding text, they do not reflect as much as they used to reflect....
For that to work, you'd need a particular sort of senior management arrangement, not just to leave him alone, but to take a lot of heat for his eccentricities. You need particular people capable of forming unusual understandings for that to work. And there would also necessarily end up being limits - there's only so far folks will cover someone else's bets.
The second reason is Musk's ego. I think he'd find a demotion humiliating, and if he's not treated as a Master of the Universe Superhero-CEO, I bet even money he'd behave worse, pick fights with his minders, etc.
Yeah. Of course he wears his ego proudly. You don't rise to that level without above average chutzpah. But I think that's more a side show than the featured event.
You can draw a very short dotted line to all the automation they eventually had to rip out of the Model 3 production line.
On the plus side he's a visionary with a lot of cash. The downside is that his ego wont let him take advice from people he doesn't agree with.
The latter character flaw is a recipe for disaster if left unchecked over the long term. This move is good for Tesla.
Elon Musk should not have said what he did, but advocating for sodomy is not critique. Some cultures have the death penalty for sodomy whereas the acceptance of critique is celebrated as wise in most cultures. The character flaw of the news is that in cases like this, it does not seek to create a peaceful resolution between the two parties, but instead blows up their differences as much as possible. Both of these men tried to save the lives of kids.
I agree that Twitter censure is likely to be of benefit to Tesla. Starving the news of Elon Musk content is a good thing. It will hurt the profits of attention-derived news. Plus, the doom of the ICE industry is rearing its head. So they can talk breathlessly about that and criticize the existing auto manufacturers for not seeing the writing on the wall once they figure out a new strategy to maximize their attention derived profits. I'm cynical enough that I figure this story shift will probably happen around the time that Tesla starts taking out television ads.
What Elon did:
> Elon Musk has escalated his baseless attacks against a British diver, claiming without evidence that the man who helped rescue children from a cave in Thailand was a “child rapist” in an email to a reporter. [https://www.theguardian.com/technology/2018/sep/04/elon-musk...]
Makes for a great story though. Much outrage. The madder you are, the more irrational you have become? The better. Many clicks. Much profit. Much circus. Totally get why the reporter violated the principle of off the record conversations in order to earn themselves money and create drama. People make money, because you just linked this article. That is how this works. This is how social media generated news tends to make its money. If the story didn't outrage you enough for you to share that link with me? They failed.
But don't let them delude you into thinking its in the best interest of either party being reported on to be known for their worst moments. Nor for the public opinion of both people to be shaped by these moments. Both of these people tried to save the lives of children. The character of both people are very likely to be somewhat congruent with that. I presume innocence until shown otherwise with regard to the accusations leveled. It isn't a story of interest to me without evidence which backs it. I refuse to join either mob.
(Which, by the way, is something that is generally A-okay - "sodomy" refers to gay (usually anal) sex, and Western societies have generally decided that's not a crime anymore.)
>Some cultures have the death penalty for sodomy whereas the acceptance of critique is celebrated as wise in most cultures
Anyway, he actually said Elon Musk to "stick the submarine where it hurts" and called it a PR stunt. Elon then responds with this tweet, which I think is relatively appropriate:
https://twitter.com/elonmusk/status/1016960469737693184
Elon then also made this statement:
https://twitter.com/GossiTheDog/status/1018513062855364608
And a series of other tweets doubling down on the sentiment. This is insane and depraved. You can argue that this is all inflamed by the media, outrage culture , etc, but at the end of the day, the CEO of a hugely popular tech company took to twitter (where he has 23m followers) to spread vile and baseless accusations about someone.
He made these tweets originally and publicly in JULY. It was only recently (and after apologizing) that he REPEATED the accusations to Buzzfeed news. And the buzzfeed reporter also preempts your accusations that the emails were leaked improperly ("He prefaced the email with "off the record" though I did not agree to that condition. Off the record is a two-party agreement.")
> Both of these people tried to save the lives of children
Yah, sure. But one of them also took to their social media and their millions of followers to accuse the other of being a pedophile, and then repeated the accusation, and then apologized, and then REPEATED the accusation again months later. With no proof. And so Musk can both be someone who tried to save the lives of children and a piece of garbage who is prone to emotional outbursts that can do real damage to real people.
Yeah, bad way to make my point. I know that there is very clear adversarial search for and an adversarial amplification and adversarial provocation of all Elon Musk's flaws. This amplification involves a game of telephone in which their is mounting outrage which turns 'shove it where it hurts' into 'dared to critique the proposed engineering solution'. I'm trying to introduce reality again in the hope of stopping the mob mentality death threats toward Unsworth and the harming of the mission of electrification of transport. People are intentionally trying to help feed this system, to see what happens [1]. I've seen enough of what happens to know this is a bad idea.
Pretty sure the right thing to do is let the conversation die. Due process will bring much more justice than social media amplification.
[1]: https://twitter.com/TeslaCharts/status/1008405211432570880
The guy is now suing Musk, which really is (in my opinion) his only choice, as otherwise many people might assume the accusation is true (as Musk is so sure, and even asked why he wasn't being sued as a response)
> The guy is now suing Musk, which really is (in my opinion) his only choice, as otherwise many people might assume the accusation is true (as Musk is so sure, and even asked why he wasn't being sued as a response)
I agree.
Given his large-scale visions, I suspect the attempt at extreme automation was intended as a proof of concept about fully automated manufacturing for off-planet use.
Knowing that, it would explain his tendency to make sudden pronouncements and try to stay at the office/factory at all hours.
You'd get into even more trouble with the SEC if you ran a public company where the executives and officers are not what you claim they are but are stand-ins for someone else.
Meanwhile, wouldn't it be completely normal and legitimate for a company to give the VP of Engineering or Operations a free hand in making engineering or operations decisions?
EDIT: largely. In a company like Tesla, with such a strong CEO, the Chairman would be a symbolic role. In a very large and sprawling company (PepsiCo?), it wouldn't be so symbolic.
In a company like Tesla, that has been sanctioned by the SEC for failing to adequately control the public actions of the still-current CEO, it's unlikely that the Chairman would be a symbolic role.
Edit: use Musk’s name.
There are specific jobs that board members and officers have. Just having 'the most shares' often isn't enough to do everything you want.
Moreover, he only owns 20% of the company.
Being 'busted down' is a huge political blow, he would be seen as weak, it would be hard for him to do his job.
He could resign as Chairman and save face, and then say 'Ima do Engineering full time' or something but it'd be hard for him to go as CEO.
There's nothing only about owning 20% of a public company.
20% and the largest shareholder, is more than enough to turn any public company inside out. Hedge funds do it all the time with dramatically weaker positions of single digit ownership. Carl Icahn routinely does it with a few percent. It's an immense position in the public markets in terms of wielding power.
'Hedge Funds' do this by forming a cabal with other funds and institutional investors.
This is totally unlike Alphabet or Facebook etc. where there is real and direct power.
I don't doubt is shareholders really wanted him gone they could punt Musk.
In fact, I think a Tesla shareholder should be pretty happy with this settlement. The $20m fine at a time when Tesla is already running low of cash is certainly tough news, but every other part of this settlement is probably good news for the company's long term health. It is also obviously a lot better than some of the punishments people were talking about earlier this week.
The details will surely be disclosed.
It got harsher just after one day
However, it could go awry. If the independent board member were to try to combat Musk and get the company wrapped up in internal struggles, it could go badly for the company.
Hi there. More than 1/4 of my net worth, and over 1/2 of my equity holdings are in TSLA. I agree with every word of this. The $20M hurts, but on net, I think this is better for Tesla than if Elon had won the lawsuit.
Re-balancing your portfolio after things have started to go very, very well is certainly sound advice, and so is selling all your equity in a promising startup the moment it has significant market value (it will most likely still be worthless).
For me, it boils down to two things:
1. I'm pretty conservative with the rest of my money (index funds, rental property). If Tesla went bankrupt tomorrow, I'd be fine. Don't get me wrong -- it'd be a bad day. But the financial hit wouldn't threaten my long-term happiness.
2. I only buy individual stocks when I feel the market has wildly misjudged a company. Tesla fit this to a tee, particularly (but not exclusively) in the early days. I took a large early position and have been buying dips along the way (yes, still). By my judgment, a dollar invested in Tesla still has a much higher expected value over 10 years than a dollar invested in any other equity that I feel qualified to assess. I would love to diversify the highly aggressive part of my portfolio, but hard as I try, I cannot find a deal this good in any other public company. So I've decided how much I'm willing to lose on what I believe is a great bet, and have invested accordingly.
I didn't mean to make this about me or my investment strategy. I was just trying to back up the sentiment that the poster above me expressed -- that people with skin in the game will see this settlement as a great thing for Tesla. I have a lot of skin in the game and that's exactly how I feel.
No offense, but why???? It is crazy to have this much of your meet worth in ANY single company. I can only hope that you are independently wealthy and if TSLA went bankrupt (of which there is a very large possibility) that you'd be ok.
I think it's save to say that the relative amount of money lost is more important than the absolute money lost for most people
Under 35s median net worth is $4k
https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com...
This assumes of course that you've got the basics covered, like being out of debt and having some kind of emergency backup (savings, insurance, well-off parents, etc).
But it would have more or less have wiped out your upside. So if that's the insurance you would have liked for such a risky investment, it would have been better to just invest in something else.
You are right. In most public companies, it would matter greatly since the chairman is the most powerful person in the company ( CEO reports to the chairman ). But as you noted, musk is the largest shareholder, but more importantly other large shareholders ( especially the institutional shareholders ) back him. So he would be in charge regardless. But removing him from the chairman is optically damaging, so it's not insignificant. It matters, but not as much as it would normally.
The combination of removing Musk as Chairman and adding two independent directors means there's a slim chance that he could eventually be fired – more likely, it means that Musk will be held more accountable to the board.
Elon's chairman will be under scrutiny by the SEC to keep an eye on Elon from the inside.
Well, the stock has done somersaults in all directions since then (benefiting both longs and shorts.) I wonder who would be eligible for part of this payout.
I suspect the investors with the best-connected lawyers will get payouts, which they will then share with the aforementioned best-connected lawers.
Presumably this is short term pain for long term increased stability/control over investor communication.
Moreso is Tesla [investors] paying the price for the SEC to make an example of them for all other public companies.
Will they think "Remember Elon Musk, he got his ass kicked at high cost to himself and his investors, nobody does it" or will they think "Remember Elon Musk, he did this and got away scot free, everyone does it" ?
That's the choice facing the SEC, and for obvious reasons they chose the former.
The deterrence argument can be used to justify anything. Why don't we behead the entire families of petty thieves? Think of the millions of other thieves who would be deterred.
It's a false dichotomy. The choices aren't "scott free" or "nuclear option" -- if their case was as strong as is being assumed, all they would have had to do is ask for what they got in the settlement and then get that in the proceeding. It wouldn't even remove the incentive to settle because that still allows them to avoid a determination of guilt.
They could also have just given the settlement negotiations more time before making a public charge to begin with. Give the other side's lawyers a chance to explain things to their client for a while first.
If CEOs are allowed to release false information, it won't be long before every other company behaves like Enron, and investors desert stock markets.
Excuse me? Fuld was canned and his equity was wiped out. In what way was Musk "crucified"? Seems to me he got off easy.
I'm skeptical however.
Which means they have the ability to remove him as CEO.
That still doesn't seem to be enough to be the most expensive tweet, though. That honor seems to be this tweet[1], where a finance firm "Selerity" tweeted Twitter's missed earnings report prior to Twitter really announcing it, costing Twitter ~25% or $8B. (The earnings report was uploaded early to the investor relation's page on Nasdaq, apparently, and it showed that Twitter missed its earnings.)
[1]: https://www.bbc.com/news/technology-32511932
Social media gaffes of the "optional" variety (Kylie, Elon, Roseanne) are a different category IMO.
I’m assuming over the past 24-48 hours it’s been a full court press of everyone trying to talk some sense into Elon. Glad they succeeded!
https://www.autoblog.com/2018/09/28/elon-musk-walked-settlem...
light slap on the wrist, a gentle speedbump, back to same.
Basically a speeding ticket.
It could still be more than a speeding ticket.
Which is really all that was needed anyway. The whole idea of forcing him out as CEO, issuing a ban on being a CEO/Director of a public company, etc., was pure over-reach from the beginning.