By Elton Gomes
James Murdoch has emerged the favourite to succeed Elon Musk as the chairman of Tesla. The carmaker has to find Musk’s replacement by the middle of next month.
Musk agreed to step down as chairman as part of a settlement with the Securities and Exchange Commission (SEC) lawsuit. The lawsuit alleged that Musk had broken the securities laws by tweeting that he had funding secured to take Tesla private. Musk, however, will continue to stay on as chief executive of Tesla.
Two people aware of discussions said Murdoch, a non-executive director of Tesla, was the lead candidate for the role. As per the SEC, Tesla’s new chairman should be an independent chairman. Another person said that external options were still being pursued, the Financial Times reported.
Who is James Murdoch?
James Murdoch is the son of the newspaper, satellite TV, and movie studio tycoon Rupert Murdoch. James Murdoch is currently chief executive of 21st Century Fox but is said to leave the role once the entertainment giant completes the sale of the majority of its assets to Disney. After James leaves his current role, his brother Lachlan is set to take over. James Murdoch joined Teslas board in 2017 as a non-executive director and has reportedly shown interest in the job of the chair.
The Tesla chairman job is perfect for James, a person briefed on the discussions told the Financial Times. Hes working on this fund and will be sitting next to Elon hes going to get access to so much deal flow.
In a recent interview at a Goldman Sachs conference, James Murdoch spoke warmly about Musk and his time as a Tesla director. Its been a really fascinating experience, Murdoch said. Whats exciting about the company and about Elon is the goals are so audacious. Hes an entrepreneur who has some really audacious goals about what can be created and what can be settled for, as per the Financial Times report.
Musk denies Murdoch will be boss
Elon Musk, however, denied the Financial Times report stating that James Murdoch is favourite to be the next chairman at Tesla. In what seems to be an inside marijuana joke, Musk tweeted at 4:20 Pacific time, saying This is incorrect.
Musk has been known to favour Antonio Gracias, Teslas lead independent director. However, Musk has been advised that Gracias might not fulfil the criteria of being sufficiently independent due to his involvement with Musks companies.
Gracias firm, Valor Equity Partners, invested in Tesla in 2005, after it sold its shares in the companys IPO in 2010. Gracias has also invested in SpaceX.
Musk forced to step down as Tesla chairman
Musk was forced to step down as chairman of Tesla after reaching a settlement with the Securities and Exchange Commission on the charges over his failed attempt to take Tesla private.
As per the settlement, Musk would have to step down as the chairman within 45 days, and will not be able to assume the same role for three years in the company. He will continue to remain Teslas CEO during that time.
Additionally, both Musk and Tesla had to pay separate $20 million fines that would be distributed to harmed investors under a court-approved process, according to the SEC, Verge reported.
Tesla’s problems
If James Murdoch does eventually become Tesla chairman, he will have some pressing concerns to resolve. Earlier in 2018, Tesla issued the largest recall in its history. The recall involved power-steering systems in 123,000 Model S sedans. Tesla said that five bolts responsible for holding the power-steering motor in place could break, corrode, or come loose.
Furthermore, credit rating agency Moody’s downgraded Tesla’s credit rating from B2 to B3 due to concerns about the company’s ability to hit its production targets for the Model 3. The move badly affected Tesla’s stock price and shed light on the frequency with which Tesla had been spending and raising money.
Elton Gomes is a staff writer at Qrius