Tesla’s Board Of Directors Are Preparing For Legal Fallout If Musk’s Gamble Implodes
Tesla’s board of directors is hiring high-powered law firms as CEO Elon Musk continues pressing the case for taking the electric automaker private, The New York Times reported Tuesday night.
Several independent directors retained Paul Weiss, Rifkind, Wharton & Garrison to wrestle with regulators gathering information related to Musk’s plan. The board is also worried the billionaire’s tweets could result in a full-blown probe into Tesla’s business dealings, sources told TheNYT.
Three of the company’s directors have separately hired the law firm Latham & Watkins to advise them as they consider Musk’s proposal. Several directors also asked the company’s CEO to curb his Twitter presence and instead stick to building vehicles, TheNYT noted.
Musk told his Twitter followers that he has secured “funding” to take the company private at $420 per share, far more than the company’s current worth. His tweet followed a report suggesting Saudi Arabia became a major Tesla shareholder earlier this year.
The report comes amid fears related to not just plans for the company to go private but also concerns that Tesla’s board is too chummy with Musk, who owns roughly 20 percent of the company. (RELATED: 6 Out Of 7 SolarCity Board Members Have Direct Ties To Elon Musk)
Gracias and Kimbal are not the only one with connections to Musk. Ira Ehrenpreis is a SpaceX investor; Brad Buss served as chief financial officer of SolarCity a solar company Musk owned before Tesla purchased it in 2016. And another director’s relationship with Musk was deemed too close for him to sit on a committee created to evaluate the possibility of going private.
Investment groups criticized Tesla’s board in 2016 for its deep connections to Musk. CtW Investor Group, for instance, said the market’s “hostile reaction” to the SolarCity deal was induced, in part, by the group’s recognition that Donald Kendall, chief executive of investment management firm Kenmont, is the only person on the SolarCity board without ties to Musk.
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