Elon Musk has toned down his Twitter comments in the week since he appeared to start an ill-advised fight with the Securities and Exchange Commission but broke his relative calm to bat down a report that Tesla board member James Murdoch is likely to succeed him as the electric-car maker’s next chairman.
A report on Wednesday by The Financial Times said Murdoch, currently the chief executive officer of 21st Century Fox and a Tesla board member since 2017, was the leading candidate to take over the chairmanship by mid-November, citing two people familiar with the matter. Musk, who has been Tesla’s chairman almost since its inception, must give up that job as part of a deal with the SEC to resolve securities fraud charges the agency brought against him.
Late Wednesday, he denied the report in three words, tweeting: “This story is incorrect.”
The billionaire entrepreneur, whose behavior has grown increasingly erratic in recent months, is said to favor his friend Antonio Gracias, a long-time Tesla board member, as his replacement, according to the report. Gracias’s Valor Equity Partners was an early investor in both Tesla and Musk’s SpaceX, and it’s not clear that he would satisfy the SEC’s requirement for a genuinely independent chairman. It remains to be seen if Musk’s preferences matter in the settlement, terms of which must be finalized by a federal district court judge.
Musk agreed on September 30 to step down as chairman and pay a $20 million fine as punishment over tweets about having “funding secured” to take Tesla private that turned out to be untrue. The deal allows him to stay on as CEO and requires Tesla to also pay a $20 million fine. It was the only option for Musk to avoid being forced out entirely if he’d fought the SEC suit in court and lost.
Importantly, the settlement requires Tesla to add two new independent members to its board, which is dominated by Musk allies including his brother and longtime investors and friends. On October 4, days after it appeared he’d moved on to more pressing matters, Musk began criticizing the SEC on Twitter and launching into a rant against investors who short Tesla shares.
Saying “…the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!” So far, the SEC has not commented on his outburst.
Murdoch’s availability to take on the Tesla chairman job has improved as the youngest son of media mogul Rupert Murdoch is leaving his current role with Fox owing to the sale of much of the company to Disney and a reorganization of its remaining units. He joined Tesla’s board, along with Linda Johnson Rice, chairman of Chicago-based Johnson Publishing Co., in 2017 after activist Tesla shareholders advocated for more board diversity and members with no previous business connections to Musk.
Tesla shares have had a remarkable tumble, down by a third since peaking at $379.57 on August 7, after his privatization tweets. The stock fell 2.25% on Wednesday to $256.88, and was down a further 1.8% in after-hours Nasdaq trading.