Elon Musk, chairman of Tesla Inc. will quit the chairman’s position. Musk and the Company will be paying $20 million each to financial regulators.
However, Musk will continue to serve as chief executive, as per an agreement that concluded the two-month long issue.
The securities fraud agreement came as good news for investors who were fearing huge losses for the electric car manufacturer had there been a long-drawn legal battle.
Musk was accused by the Securities and Exchange Commission (SEC) of the US, of deceiving investors through his tweets in August wherein he implied his intention to take Tesla private at the rate of $420 per share. He claimed that he had received funding. While these were baseless claims, the tweet sent the market into a tizzy, adversely affecting the investors.
These charges, however, caused Tesla’s market value to drop to $45.2 billion on Friday, lower than General Motors’ $47.5 billion. Neither Musk nor Tesla have commented on the same.
The recent agreement will go a long way in recovering Tesla’s image, which had taken a beating owing to Musk’s behaviour of late. Musk had smoked marijuana in public on a webcast, and attacked a British rescue diver on Twitter.
The settlement will be proof of action being taken, without having to force Musk to leave. However, the Company will have to appoint an independent chairman, two independent directors, and a board committee to decide on the controls over Musk’s communications as per the agreement.
Not only is Musk expected to give up the chairman’s position at Tesla within 45 days, but he cannot be re-elected to the post for three years.
The settlement does not bar Musk from running Tesla, which would have been a huge concern for investors, as Musk is synonymous with the brand.
Musk who was considered to be Tesla’s Steve Jobs, has been deeply involved in Tesla’s product design and technology strategy, and has been driving the Company’s workforce towards exceptional accomplishments.