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Aug 21, 2018

Tesla Board To Musk: Stop Tweeting!

investopedia.com

Donna Fuscaldo



President Donald Trump isn’t the only one facing calls to stop tweeting. Tesla Inc. (TSLA) Chief Executive Elon Musk is getting the same advice from his board a week after disclosing a go-private offer on the microblogging platform.
Citing people familiar with the matter, the New York Times reported board members at the electric car company are in damage control mode, with some directors saying that Musk is out of control. They are growing more alarmed over Musk’s behavior, with many blindsided by his move to tweet out that he has secured the funding to take the company private in a $420-a-share deal.
Angered that the CEO’s tweets forced them to make a public statement when the potential deal is in a very early stage, they urged Musk to take a digital time out. One director went as far as to tell Musk to focus on building cards and launching rockets instead of tweeting, reported the New York Times. But it’s not just the board. The paper noted employees and the company’s public relation shop have also urged Musk to reign in his penchant for tweeting.  That may tough for the CEO to do. A recent analysis by the Wall Street Journal revealed Musk has tweeted out comments about life, critics, and business ideas some 4,925 times. (See more: Musk's Tweets Blindsided Tesla Board Members: NYT.)

Musk Ignores The Advice

It's advice he hasn’t heeded since last week when he surprised Wall Street, investors, and his own board, by disclosing the $420 a share offer to take Tesla private. He has since turned to Twitter to announce he has retained Goldman Sachs and Silver Lake as advisers for that deal. That may give the board more fodder given the Wall Street Journal reported Musk’s Goldman Sachs tweet is premature. The two sides are still hammering out the fees Goldman would get for advising on the deal.

Board Moves To Protect Themselves

In addition to reining in a CEO that some board members view as reckless, the board is taking steps to protect themselves if there is any backlash from the Musk go-private comments on Twitter. (See more: Tesla Forms Special Committee on Going Private.) The Securities and Exchange Commission is looking into his tweets and two class action lawsuits have already emerged against Tesla and its CEO.  The New York Times reported the independent directors have brought on lawyers from Paul, Weiss, Rifkind, Wharton & Garrison LLP to help with any fall out from the SEC due to the posts. The paper noted the SEC inquiry is in the early stages but could become a full-blown investigation.