Report: Musk Threatened to Quit Over Original SEC Settlement
FIGHTING WORDS
Ultimately forcing the company into a worse deal.
Joshua Lott/Getty
Tesla’s stunning decision to abandon a generous settlement with the Securities and Exchange Commission and claim that it was “fully confident in Elon, his integrity, and his leadership of the company” last Thursday was not prompted by righteous belief in the embattled founder—instead, it was the result of a direct threat by Musk to quit the company if the settlement moved forward. TheNew York Times reports that during a phone call between Musk and board directors prior to Thursday’s decision, he gave the board an ultimatum: If Tesla proceeds with the settlement, he’d quit. What’s more, the board would have to issue a public statement defending his integrity. Cautious of losing the man behind the multibillion-dollar company, the board caved. On Saturday, a day after Tesla’s stocked tanked by 14 points, Tesla and the SEC reached a new deal, this time with Musk’s approval. But because the company had rejected the commission’s first offer, this settlement was far more stringent. Musk’s ban on serving as chairman was extended, and his fines doubled. “Rejecting such a favorable settlement is proof that he needs monitoring,” a professor at Columbia Law School told the Times. “He didn’t have a legal leg to stand on, and I’m sure his lawyer told him that. But he got very touchy about not being able to proclaim his innocence.”
