Elon Musk reportedly coerced Tesla board members to his will by threatening to quit if they accepted a deal with the Securities and Exchange Commission (SEC).
Musk, the CEO and chairman of Tesla, initially scared board members away from accepting a settlement with the SEC by threatening to resign from the company, according to a report from The New York Times. The details bring to light the inside workings and strife among Tesla’s higher-ups before ultimately accepting a harsher deal with federal regulators.
Musk was immediately put under investigation after issuing his infamous tweet in August about possibly taking his electric car company private. Federal regulators accused him of committing fraud and offered Tesla a deal: Musk could remain on as CEO, but he must step down as chairman for two years and pay a $10 million fine.
The beleaguered chief executive was having none of it. Musk told company lawyers he would resign on the spot if they accepted the settlement. Faced with the prospect of losing their greatest asset, board members were forced to reject the SEC’s offer.
However, while the prospect of prosecution didn’t seem to faze the Tesla co-founder, he was moved when the crisis clearly began to affect his company. After rejecting the settlement, Tesla’s stock nosedived nearly 14 percent the next day — forcing Musk and board members back to the negotiating table. (RELATED: Tesla Finally Meets Model 3 Production Goals But Messes Up Delivering Them)
The company ultimately accepted a tougher deal than the original: Musk would be banned as chairman for three years and pay a fine of $20 million. Additionally, Tesla would have to pay a fine of $20 million, with Musk pledging to purchase that same amount in company stock.
Under the terms of the settlement, Musk can remain on as chairman for 45 days until he must resign, giving the board ample time to locate a qualified replacement.
While Musk is viewed as a crucial asset for Tesla, his increasingly erratic behavior has also put the company in precarious situations. He was sued for defamation after suggesting more than once that one of the divers who rescued boys trapped in a Thai cave was a pedophile. Musk further attracted controversy for smoking pot during a live YouTube interview in September, resulting in a dip in stock value and executive resignations.
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