Musk shows correspondent CBS correspondent Lesley Stahl the autopilot feature in a Tesla Model 3.
Tesla is adding billionaire Larry Ellison and Kathleen Wilson-Thompson, an executive with the Walgreens Boots Alliance, as independent board members to fulfill a settlement with the U.S. Securities and Exchange Commission sparked by Elon Musk’s tweets about taking the company private. He also lost his position as Tesla chairman as part of the deal.
The two new directors expand Tesla’s board to 11 members from nine, and their appointments are effective as of December 27, the electric carmaker said in an SEC filing today. Musk, Tesla’s CEO and biggest shareholder, and his brother Kimball remain board members, as does friend and investor Steve Jurvetson, who's been on leave since November 2017.
New Tesla board member Kathleen Wilson-Thompson is executive vice president and Global Chief Human ... [+]
Ellison, Oracle’s executive chairman, chief technology officer and founder, in October said he's a "very close" Musk friend and owns 3 million shares of Palo Alto, California-based Tesla, his second-largest personal investment. Wilson-Thompson is an executive vice president and global chief human resources officer for pharmacy giant Walgreens Boots and is the second African-American woman on Tesla’s board, joining Linda Johnson Rice, chairman and CEO of Johnson Publishing Co.
“In conducting a widespread search over the last few months, we sought to add independent directors with skills that would complement the current board’s experience,” Tesla’s board said in a joint statement. “In Larry and Kathleen, we have added a preeminent entrepreneur and a human resources leader, both of whom have a passion for sustainable energy.”
The board changes close out a wild year for Tesla, marked by Musk's erratic public comments that also sparked a defamation lawsuit, the death of a Model X owner in an accident that occurred while using Tesla's semiautomated autopilot feature, big swings in the company's stock price, a massive push to boost Model 3 production as well as its most profitable quarter in company history.
Investors reacted positively to the announcement as Tesla rose 5.6% to $333.87 in Friday trading.
Elon Musk via Twitter
The SEC had sued Musk over his “funding secured” tweets in August about taking the company private that turned out to be false, and initially sought his removal as CEO. The regulator is pursuing a separate probe of Musk’s public comments regarding Tesla production targets that turned out to be inaccurate.
The board additions come just in time to meet a Dec. 28 deadline for the settlement, that also included combined fines of $40 million for Musk and Tesla, the appointment of director Robyn Denholm to replace Musk as chairman and a requirement that Musk’s tweets about the company be reviewed before being posted.
Ellison has been friendly with Musk over the years and came to his defense in an October analyst meeting, criticizing tough media coverage of his fellow billionaire by noting that “Tesla has a lot of upside,” according to Bloomberg. Tesla didn't directly comment on whether Ellison's Tesla share ownership or relationship with Musk is at odds with his being an "independent" board member.
ORACLE OPENWORLD 2018
“We’re not looking at this as positively as the market is right now,” Gordon Johnson, a managing director with the Vertical Group, told Bloomberg TV.
“We thought they were going to appoint truly independent directors, and if you look at Larry Ellison, he’s previously said he’s a close friend of Elon Musk and it’s his second-largest investment," said Johnson, who has a bearish view of Tesla. "So you have to question whether that’s truly independent.”
Connection to Theranos
Curiously, in addition to joining Tesla's board, Ellison and Wilson-Thompson share a connection to Theranos, the failed medical tech company that made fraudulent claims about its blood tests. Ellison had invested in the startup and even been an advisor to Theranos founder Elizabeth Holmes. Wilson-Thompson's connection was through Walgreens.
"With respect to Kathleen, we don't know of her relationship to Elon Musk but what we do know is that when she was associated with WBA they brought in Theranos's product without testing the product, which clearly proved to be an error," Vertical's Johnson told Bloomberg.
Whether a new chairman and members of Tesla’s board, which has been highly compliant to Musk’s wishes over the years, will make a big change remains to be seen. In an interview this month with 60 Minutes, Musk told CBS reporter Lesley Stahl that he selected Denholm as his replacement as chairman and that it’s “not realistic” to view overseeing him as part of her role.
“I am the largest shareholder in the company. And I can just call for a shareholder vote and get anything done that I want,” Musk said*.
He also emphasized in the interview that “I do not respect the SEC. I do not respect them.”
(*Tesla says Musk's full comment in the interview was: "I am the largest shareholder in the company and a very high percentage of the shareholders support me and the company. So essentially I can just call for a shareholder vote and get anything done that I want, provided I could get support for at least 1/3 of the other shareholders, which is likely. Not certain, but likely. At the end of the day the shareholders control the company.")
