Elon Musk hasn’t tweeted in 10 days, but his Twitter account is once again news because time is a flat circle.
This is why we must now scrunch our faces, cock our heads to one side and strain to recall a weed joke shared by the chief executive on August 7, 2018. Otherwise, we’ll never understand why activist investors are shouting for the Securities and Exchange Commission to intervene in Tesla’s shrinking board.
On that fateful day, Musk said he was “considering taking Tesla private at $420” per share and had secured funding to do so. Only, he apparently hadn’t, so the SEC hit Musk with fraud charges over “false and misleading” tweets. Musk and Tesla later reached an agreement to play nice with the agency. It involved some wrist slapping.
As part of the agreement, Musk and Tesla collectively forked over $40 million, Musk temporarily stepped down as chairman, Tesla added two independent directors to its board, and Musk was told to get his tweets checked. Yet, according to a June 17 letter from SOC, an activist investor group, Tesla is now violating this deal twice over.
The group states that:
- Tesla’s board failed to exercise “effective oversight or [establish] a credible pre-clearance process” for Elon’s tweets.
- And, Tesla does not intend to replace Oracle CEO and island owner Larry Ellison, who is “one of the two independent directors Tesla appointed to comply” with the deal. (Tesla indicated last month that Ellison would leave his role and would not be replaced.)
SOC claims that Tesla’s shrinking board, and the dwindling ratio of independent board members to non-independent board members (poised to go from “9 to 2” to “5 to 2”), amounts to a “failure to comply” with the SEC decree. The investor group now wants the SEC to make Tesla “nominate at least one additional independent director to its board.” Meanwhile, Musk filed an appeal a few weeks ago to kill the SEC agreement altogether, in the name of free speech.
Either way, there is no escape. Try as I might to forget Musk’s silly little tweets, the universe simply will not allow it. I’m choosing to accept my fate of residing in a Musk-laced “Groundhog Day.” Will you?
Tesla did not immediately respond to a request for comment on the letter.