Tesla has added Larry Ellison and Kathleen Wilson-Thompson to its board, picking a controversial Silicon Valley luminary and a respected human resources expert to show securities regulators that it’s giving Elon Musk more oversight.
Ellison, the co-founder of Oracle, and Wilson-Thompson, the global chief human resources officer of Walgreens Boots Alliance, join a board the US Securities and Exchange Commission ordered to step up its oversight after Musk claimed in August to have had the funding and investor support for a buyout. The CEO relinquished the role of chairman in November, and both he and the company agreed to pay US$20-million penalties.
In Ellison, Musk has added another larger-than-life technology titan lauded for his business accomplishments but not without his own corporate governance controversies. The 74-year-old billionaire came under attack from Oracle shareholders for excessive pay packages while running the company. Ellison also publicly defended Musk after his tweets about taking Tesla private landed him in hot water with the SEC, a point that raised eyebrows with corporate governance experts.
“His vocal support for Musk doesn’t suggest the kind of objectivity coming in that I think people had hoped for,” said Charles Elson, director of the John L Weinberg Center for Corporate Governance at the University of Delaware. “The SEC’s point was to to bring in two people who were neither supporters nor vocal opponents of Tesla.”
Wall Street analysts and investors cheered the news, with Tesla shares rising as much as 3.5% to $327 as of 9.55am on Friday in New York. The stock was up 1.5% this year through to the close on Thursday.
Wedbush Securities’ Daniel Ives called the choice of Ellison “a home run” and said he could “help channel Musk’s energy and passion into positives” and steer him away from the cloud created by his “going private tweet storm”, according to research note published on Friday.
Tesla also said it is setting up a committee on the board to oversee compliance with the SEC agreement regarding public disclosures and public statements and review potential conflicts of interest, employment and compensation disputes, according to a regulatory filing on Friday.
The new additions to the board put a bookend on a months-long distraction that at one point looked like it might cost Musk his future with the company. While reining him in may prove challenging, they’ll help steer a car maker that’s made significant strides in profitably making and delivering electric vehicles.
Ellison went off-script during an Oracle meeting with analysts in October to announce that he had been building a personal stake in Tesla and that it was his second largest holding. He criticised how the media had covered Musk, 47, whom he called a close friend.
“This guy is landing rockets,” Ellison said in October of Musk, who also runs SpaceX. “You know, he’s landing rockets on robot drone rafts in the ocean. And you’re saying he doesn’t know what he’s doing. Well, who else is landing rockets? You ever land a rocket on a robot drone? Who are you?”
Tesla said in its statement announcing Ellison would be joining the board that he had purchased three million shares of the electric car maker earlier this year.
Tesla’s board now has 11 members, including three women. This fall, California became the first US state to mandate that publicly traded companies have women on their boards. Those with at least seven directors need to have at least three women by 2021.
The SEC moved to punish Tesla and Musk because it alleged he committed fraud by tweeting that he had the “funding secured” to take the company private at $420/share. The agency said this and other claims the CEO made on 7 August were false and misleading and affected Tesla’s stock.
Musk and Tesla reached the settlement with the SEC on 29 September. It gave the company 90 days to add directors and take other actions. Since then, the CEO has publicly lampooned the agency and bristled at the notion that he’ll change his Twitter habits.
Tesla’s legal department also has been going through shake-ups since Musk’s run-in with the SEC.
The company tapped Dane Butswinkas, the Washington trial lawyer who represented the CEO in his legal battle with the agency, earlier this month to become general counsel. He’ll replace Todd Maron, who’s leaving Tesla in January after five years. Before he joined the company, he represented Musk through two divorces.
In November, Phil Rothenberg, a vice president on Tesla’s legal staff, left to became general counsel at Sonder, a hospitality start-up. Rothenberg previously worked at the SEC. — Reported by Dana Hull and Gabrielle Coppola, with assistance from Gerrit De Vynck, (c) 2018 Bloomberg LP