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Honest question: Does it really matter if he loses the chairman role? Or even if he lost the CEO role? If he was busted down to VP of Engineering he would still

Honest question: Does it really matter if he loses the chairman role? Or even if he lost the CEO role? If he was busted down to VP of Engineering he would still be a major shareholder and everyone would did what he said right? He just wouldn't have any "official" corporate leader responsibilities (quarterly calls, etc). Or am I totally wrong?

_jal 8y ago
I suspect it would matter, for at least two reasons. For that to work, you'd need a particular sort of senior management arrangement, not just to leave him alone, but to take a lot of heat for his eccentricities. You need particular people capable of forming unusual understandings for that to work. And there would also necessarily end up being limits - there's only so far folks will cover someone else's bets. The second reason is Musk's ego. I think he'd find a demotion humiliating, and if he's not treated as a Master of the Universe Superhero-CEO, I bet even money he'd behave worse, pick fights with his minders, etc.
- alexandros 8y ago
  Research what he did when he was fired as CEO of PayPal. He made sure the company had good management by making sure Peter Thiel came back (even though they weren't the best of friends at the time), and he stayed quiet, allowing the team to execute and make him rich. Now that you know this, will you update your beliefs about his ego?
  - rjplatte 8y ago
    Essentially, he's egotistical, but if someone forces him to back down, he's also mature enough to handle it.
    - chiefalchemist 8y ago
      Perhaps it's more accurate to say he's driven, no nonsense and shrewd? Yeah. Of course he wears his ego proudly. You don't rise to that level without above average chutzpah. But I think that's more a side show than the featured event.
    - CJefferson 8y ago
      You mean like how he has doubled down twice on accusing a random diver of being a paedophile?
      - radiorental 8y ago
        Not a random diver, it was someone who was a domain expert and dared to critique the proposed engineering solution from Musk. You can draw a very short dotted line to all the automation they eventually had to rip out of the Model 3 production line. On the plus side he's a visionary with a lot of cash. The downside is that his ego wont let him take advice from people he doesn't agree with. The latter character flaw is a recipe for disaster if left unchecked over the long term. This move is good for Tesla.
        JoshCole 8y ago
        > critique Elon Musk should not have said what he did, but advocating for sodomy is not critique. Some cultures have the death penalty for sodomy whereas the acceptance of critique is celebrated as wise in most cultures. The character flaw of the news is that in cases like this, it does not seek to create a peaceful resolution between the two parties, but instead blows up their differences as much as possible. Both of these men tried to save the lives of kids. I agree that Twitter censure is likely to be of benefit to Tesla. Starving the news of Elon Musk content is a good thing. It will hurt the profits of attention-derived news. Plus, the doom of the ICE industry is rearing its head. So they can talk breathlessly about that and criticize the existing auto manufacturers for not seeing the writing on the wall once they figure out a new strategy to maximize their attention derived profits. I'm cynical enough that I figure this story shift will probably happen around the time that Tesla starts taking out television ads.
        9935c101ab17a66 8y ago
        Wu... wut? "Advocating for sodomy is not a critique" ??? What Elon did: > Elon Musk has escalated his baseless attacks against a British diver, claiming without evidence that the man who helped rescue children from a cave in Thailand was a “child rapist” in an email to a reporter. [https://www.theguardian.com/technology/2018/sep/04/elon-musk-claims-diver-in-thai-cave-rescue-is-child-rapist-without-evidence https://www.theguardian.com/technology/2018/sep/04/elon-musk...]
    - Fnoord 8y ago
      Yes, that's the gist I got out of his behaviour at X.com when they merged with Cofinity as well (from the book The PayPal Wars). He wanted to turn it into a full Microsoft shop, and and he wanted to change the name to X. To sum it up: people disagreed, and there were setbacks after setbacks with the former. When he put through the latter, there was a small internal struggle and Peter Thiel become interim CEO.
  - gamblor956 8y ago
    Everything I could find says the board asked Thiel to come back, not Musk... In fact, supposedly they fired Musk and hired Thiel back while Musk was flying internationally, and had announced they change at CEO before he landed. Knowing that, it would explain his tendency to make sudden pronouncements and try to stay at the office/factory at all hours.
    - alexandros 8y ago
      Went back to the sources, and it seems you're right on the Thiel thing. He did make peace with Thiel and Levchin pretty fast though, and even invested more money into paypal after he was kicked out (citation: the Ashley Vance book on Elon) which was my main point -- he didn't blow shit up or incite a rebelion, he just stayed on the sidelines and supported the team like a trooper.
      - 9935c101ab17a66 8y ago
        You made two separate points, and the one you lead with was that he recruited Thiel after being fired... which isn't true. Also, "not blowing shit up" especially when he has money involved != 'staying on the sidelines and supporting the team like a trooper'.
  - RivieraKid 8y ago
    Not the OP but having followed Musk for a long time, I think his ego is enormous and that PayPal anecdote doesn't change that. Few people are more sensitive to criticism than Musk.
elihu 8y ago
It would matter if there were someone else in the company in a position of higher authority who could say "no" to something Elon wanted to do, even if it only happened rarely.
pvg 8y ago
everyone would did what he said right? You'd get into even more trouble with the SEC if you ran a public company where the executives and officers are not what you claim they are but are stand-ins for someone else.
- AnthonyMouse 8y ago
  There are specific things that are the role of the top level executives, like certifying the company's SEC reports. But I'm not sure how having someone other than Musk independently and competently do those things would be expected to hurt anything. Meanwhile, wouldn't it be completely normal and legitimate for a company to give the VP of Engineering or Operations a free hand in making engineering or operations decisions?
- dunpeal 8y ago
  This. Tesla is a publicly traded company. It makes clear, legally-binding representations of who its officers are and what its organizational structure is. If Tesla represents that Musk is not longer a chairman, while in fact he is, then that's (again) investor fraud.
tim333 8y ago
It might actually help a bit as he seems to be burning out from “120-hour work weeks” (https://entrepreneurs.maqtoob.com/why-elon-musks-burnout-is-a-game-changer-that-can-t-be-ignored-8b97692ff588 https://entrepreneurs.maqtoob.com/why-elon-musks-burnout-is-...)
- e40 8y ago
  The Chairman role is largely symbolic. I seriously doubt that if he gave it up, it would reduce his work load. EDIT: largely. In a company like Tesla, with such a strong CEO, the Chairman would be a symbolic role. In a very large and sprawling company (PepsiCo?), it wouldn't be so symbolic.
  - dragonwriter 8y ago
    > In a company like Tesla, with such a strong CEO, the Chairman would be a symbolic role. In a company like Tesla, that has been sanctioned by the SEC for failing to adequately control the public actions of the still-current CEO, it's unlikely that the Chairman would be a symbolic role.
    - Latteland 8y ago
      So he made one big mistake. He's done a lot of good stuff. He was punished, he's done a lot of good for the world. Compare him to the heads of banks and financial orgs in 2008, people doing credit default swaps,, the entire financial world that takes a cut out of most transactions for no good readon, like ipos. He's a huge net positive for the world.
      - brennebeck 8y ago
        I don’t think the point of the comment is at all related to what Musk has or has not done, nor his value as CEO. The point was that after a public censure of a CEO and company, the subsequent Chairman would be expected to work towards preventing a similar situation and would have the authority/mandate to do so. Edit: use Musk’s name.
sonnyblarney 8y ago
It matters quite a lot. There are specific jobs that board members and officers have. Just having 'the most shares' often isn't enough to do everything you want. Moreover, he only owns 20% of the company. Being 'busted down' is a huge political blow, he would be seen as weak, it would be hard for him to do his job. He could resign as Chairman and save face, and then say 'Ima do Engineering full time' or something but it'd be hard for him to go as CEO.
- adventured 8y ago
  > Moreover, he only owns 20% of the company. There's nothing only about owning 20% of a public company. 20% and the largest shareholder, is more than enough to turn any public company inside out. Hedge funds do it all the time with dramatically weaker positions of single digit ownership. Carl Icahn routinely does it with a few percent. It's an immense position in the public markets in terms of wielding power.
  - cagenut 8y ago
    I've seen that pattern too but I don't get it. Why would single digit percentages matter that much?
    - sonnyblarney 8y ago
      It matters when it's a big chunk and the fund leads a movement among shareholders many of whom may be tiny, dispersed, or possibly passive.
  - sonnyblarney 8y ago
    20% is not enough, you need to wrangle the remaining votes which is not a sure thing. 'Hedge Funds' do this by forming a cabal with other funds and institutional investors. This is totally unlike Alphabet or Facebook etc. where there is real and direct power. I don't doubt is shareholders really wanted him gone they could punt Musk.
  - matchagaucho 8y ago
slg 8y ago
He will still be the most powerful single person at Tesla, but this at least opens the door for him to not be the most powerful entity at Tesla. There is no way of knowing when or even if the Tesla board will start saying no to Musk, but this at least makes it possible for them in the future. That is a good thing in my opinion. In fact, I think a Tesla shareholder should be pretty happy with this settlement. The $20m fine at a time when Tesla is already running low of cash is certainly tough news, but every other part of this settlement is probably good news for the company's long term health. It is also obviously a lot better than some of the punishments people were talking about earlier this week.
- DennisP 8y ago
  Musk is covering the fine to Tesla by buying $20M of Tesla stock. https://www.nytimes.com/2018/09/29/business/tesla-musk-sec-settlement.html https://www.nytimes.com/2018/09/29/business/tesla-musk-sec-s...
  - amluto 8y ago
    I don’t think “covering” is the word you’re looking for here...
  - greglindahl 8y ago
    For those wondering why, look at the comments elsewhere in this discussion about how the $20mm owed by Tesla will cause them to run out of cash sooner.
  - kyle_v 8y ago
    I dont see how that's covering if he's still getting $20m of tesla stock
    - jsight 8y ago
      I don't know the terms. I'm assuming that this is a new issuance at the current market price and thus would effectively provide $20 million of additional liquidity to counteract the cost of the settlement. The details will surely be disclosed.
liftbigweights 8y ago
> Or am I totally wrong? You are right. In most public companies, it would matter greatly since the chairman is the most powerful person in the company ( CEO reports to the chairman ). But as you noted, musk is the largest shareholder, but more importantly other large shareholders ( especially the institutional shareholders ) back him. So he would be in charge regardless. But removing him from the chairman is optically damaging, so it's not insignificant. It matters, but not as much as it would normally.
SatvikBeri 8y ago
The chairman has the power to appoint members of the board, the board has the power to fire the CEO. So someone who's both chairman and CEO is virtually impossible to fire. The combination of removing Musk as Chairman and adding two independent directors means there's a slim chance that he could eventually be fired – more likely, it means that Musk will be held more accountable to the board.
snowmaker 8y ago
Not much, the Chairman role is mostly symbolic. This will not have any day-to-day consequences.
- simonswords82 8y ago
  Not true, I have a chairman, I answer to him and I don't have the SEC watching me. Elon's chairman will be under scrutiny by the SEC to keep an eye on Elon from the inside.
bigbadgoose 8y ago
I expect the stock to pop on Monday given this slap on the wrist

_jal 8y ago

I suspect it would matter, for at least two reasons. For that to work, you'd need a particular sort of senior management arrangement, not just to leave him alone, but to take a lot of heat for his eccentricities. You need particular people capable of forming unusual understandings for that to work. And there would also necessarily end up being limits - there's only so far folks will cover someone else's bets. The second reason is Musk's ego. I think he'd find a demotion humiliating, and if he's not treated as a Master of the Universe Superhero-CEO, I bet even money he'd behave worse, pick fights with his minders, etc.

alexandros 8y ago
Research what he did when he was fired as CEO of PayPal. He made sure the company had good management by making sure Peter Thiel came back (even though they weren't the best of friends at the time), and he stayed quiet, allowing the team to execute and make him rich. Now that you know this, will you update your beliefs about his ego?
- rjplatte 8y ago
  Essentially, he's egotistical, but if someone forces him to back down, he's also mature enough to handle it.
  - chiefalchemist 8y ago
    Perhaps it's more accurate to say he's driven, no nonsense and shrewd? Yeah. Of course he wears his ego proudly. You don't rise to that level without above average chutzpah. But I think that's more a side show than the featured event.
  - CJefferson 8y ago
    You mean like how he has doubled down twice on accusing a random diver of being a paedophile?
    - radiorental 8y ago
      Not a random diver, it was someone who was a domain expert and dared to critique the proposed engineering solution from Musk. You can draw a very short dotted line to all the automation they eventually had to rip out of the Model 3 production line. On the plus side he's a visionary with a lot of cash. The downside is that his ego wont let him take advice from people he doesn't agree with. The latter character flaw is a recipe for disaster if left unchecked over the long term. This move is good for Tesla.
      - JoshCole 8y ago
        > critique Elon Musk should not have said what he did, but advocating for sodomy is not critique. Some cultures have the death penalty for sodomy whereas the acceptance of critique is celebrated as wise in most cultures. The character flaw of the news is that in cases like this, it does not seek to create a peaceful resolution between the two parties, but instead blows up their differences as much as possible. Both of these men tried to save the lives of kids. I agree that Twitter censure is likely to be of benefit to Tesla. Starving the news of Elon Musk content is a good thing. It will hurt the profits of attention-derived news. Plus, the doom of the ICE industry is rearing its head. So they can talk breathlessly about that and criticize the existing auto manufacturers for not seeing the writing on the wall once they figure out a new strategy to maximize their attention derived profits. I'm cynical enough that I figure this story shift will probably happen around the time that Tesla starts taking out television ads.
        9935c101ab17a66 8y ago
        Wu... wut? "Advocating for sodomy is not a critique" ??? What Elon did: > Elon Musk has escalated his baseless attacks against a British diver, claiming without evidence that the man who helped rescue children from a cave in Thailand was a “child rapist” in an email to a reporter. [https://www.theguardian.com/technology/2018/sep/04/elon-musk-claims-diver-in-thai-cave-rescue-is-child-rapist-without-evidence https://www.theguardian.com/technology/2018/sep/04/elon-musk...]
  - Fnoord 8y ago
    Yes, that's the gist I got out of his behaviour at X.com when they merged with Cofinity as well (from the book The PayPal Wars). He wanted to turn it into a full Microsoft shop, and and he wanted to change the name to X. To sum it up: people disagreed, and there were setbacks after setbacks with the former. When he put through the latter, there was a small internal struggle and Peter Thiel become interim CEO.
- gamblor956 8y ago
  Everything I could find says the board asked Thiel to come back, not Musk... In fact, supposedly they fired Musk and hired Thiel back while Musk was flying internationally, and had announced they change at CEO before he landed. Knowing that, it would explain his tendency to make sudden pronouncements and try to stay at the office/factory at all hours.
  - alexandros 8y ago
    Went back to the sources, and it seems you're right on the Thiel thing. He did make peace with Thiel and Levchin pretty fast though, and even invested more money into paypal after he was kicked out (citation: the Ashley Vance book on Elon) which was my main point -- he didn't blow shit up or incite a rebelion, he just stayed on the sidelines and supported the team like a trooper.
    - 9935c101ab17a66 8y ago
      You made two separate points, and the one you lead with was that he recruited Thiel after being fired... which isn't true. Also, "not blowing shit up" especially when he has money involved != 'staying on the sidelines and supporting the team like a trooper'.
- RivieraKid 8y ago
  Not the OP but having followed Musk for a long time, I think his ego is enormous and that PayPal anecdote doesn't change that. Few people are more sensitive to criticism than Musk.

elihu 8y ago

It would matter if there were someone else in the company in a position of higher authority who could say "no" to something Elon wanted to do, even if it only happened rarely.

pvg 8y ago

everyone would did what he said right? You'd get into even more trouble with the SEC if you ran a public company where the executives and officers are not what you claim they are but are stand-ins for someone else.

AnthonyMouse 8y ago
There are specific things that are the role of the top level executives, like certifying the company's SEC reports. But I'm not sure how having someone other than Musk independently and competently do those things would be expected to hurt anything. Meanwhile, wouldn't it be completely normal and legitimate for a company to give the VP of Engineering or Operations a free hand in making engineering or operations decisions?
dunpeal 8y ago
This. Tesla is a publicly traded company. It makes clear, legally-binding representations of who its officers are and what its organizational structure is. If Tesla represents that Musk is not longer a chairman, while in fact he is, then that's (again) investor fraud.

tim333 8y ago

It might actually help a bit as he seems to be burning out from “120-hour work weeks” (https://entrepreneurs.maqtoob.com/why-elon-musks-burnout-is-a-game-changer-that-can-t-be-ignored-8b97692ff588 https://entrepreneurs.maqtoob.com/why-elon-musks-burnout-is-...)

e40 8y ago
The Chairman role is largely symbolic. I seriously doubt that if he gave it up, it would reduce his work load. EDIT: largely. In a company like Tesla, with such a strong CEO, the Chairman would be a symbolic role. In a very large and sprawling company (PepsiCo?), it wouldn't be so symbolic.
- dragonwriter 8y ago
  > In a company like Tesla, with such a strong CEO, the Chairman would be a symbolic role. In a company like Tesla, that has been sanctioned by the SEC for failing to adequately control the public actions of the still-current CEO, it's unlikely that the Chairman would be a symbolic role.
  - Latteland 8y ago
    So he made one big mistake. He's done a lot of good stuff. He was punished, he's done a lot of good for the world. Compare him to the heads of banks and financial orgs in 2008, people doing credit default swaps,, the entire financial world that takes a cut out of most transactions for no good readon, like ipos. He's a huge net positive for the world.
    - brennebeck 8y ago
      I don’t think the point of the comment is at all related to what Musk has or has not done, nor his value as CEO. The point was that after a public censure of a CEO and company, the subsequent Chairman would be expected to work towards preventing a similar situation and would have the authority/mandate to do so. Edit: use Musk’s name.

sonnyblarney 8y ago

It matters quite a lot. There are specific jobs that board members and officers have. Just having 'the most shares' often isn't enough to do everything you want. Moreover, he only owns 20% of the company. Being 'busted down' is a huge political blow, he would be seen as weak, it would be hard for him to do his job. He could resign as Chairman and save face, and then say 'Ima do Engineering full time' or something but it'd be hard for him to go as CEO.

adventured 8y ago
> Moreover, he only owns 20% of the company. There's nothing only about owning 20% of a public company. 20% and the largest shareholder, is more than enough to turn any public company inside out. Hedge funds do it all the time with dramatically weaker positions of single digit ownership. Carl Icahn routinely does it with a few percent. It's an immense position in the public markets in terms of wielding power.
- cagenut 8y ago
  I've seen that pattern too but I don't get it. Why would single digit percentages matter that much?
  - sonnyblarney 8y ago
    It matters when it's a big chunk and the fund leads a movement among shareholders many of whom may be tiny, dispersed, or possibly passive.
- sonnyblarney 8y ago
  20% is not enough, you need to wrangle the remaining votes which is not a sure thing. 'Hedge Funds' do this by forming a cabal with other funds and institutional investors. This is totally unlike Alphabet or Facebook etc. where there is real and direct power. I don't doubt is shareholders really wanted him gone they could punt Musk.
- matchagaucho 8y ago

slg 8y ago

He will still be the most powerful single person at Tesla, but this at least opens the door for him to not be the most powerful entity at Tesla. There is no way of knowing when or even if the Tesla board will start saying no to Musk, but this at least makes it possible for them in the future. That is a good thing in my opinion. In fact, I think a Tesla shareholder should be pretty happy with this settlement. The $20m fine at a time when Tesla is already running low of cash is certainly tough news, but every other part of this settlement is probably good news for the company's long term health. It is also obviously a lot better than some of the punishments people were talking about earlier this week.

DennisP 8y ago
Musk is covering the fine to Tesla by buying $20M of Tesla stock. https://www.nytimes.com/2018/09/29/business/tesla-musk-sec-settlement.html https://www.nytimes.com/2018/09/29/business/tesla-musk-sec-s...
- amluto 8y ago
  I don’t think “covering” is the word you’re looking for here...
- greglindahl 8y ago
  For those wondering why, look at the comments elsewhere in this discussion about how the $20mm owed by Tesla will cause them to run out of cash sooner.
- kyle_v 8y ago
  I dont see how that's covering if he's still getting $20m of tesla stock
  - jsight 8y ago
    I don't know the terms. I'm assuming that this is a new issuance at the current market price and thus would effectively provide $20 million of additional liquidity to counteract the cost of the settlement. The details will surely be disclosed.

liftbigweights 8y ago

> Or am I totally wrong? You are right. In most public companies, it would matter greatly since the chairman is the most powerful person in the company ( CEO reports to the chairman ). But as you noted, musk is the largest shareholder, but more importantly other large shareholders ( especially the institutional shareholders ) back him. So he would be in charge regardless. But removing him from the chairman is optically damaging, so it's not insignificant. It matters, but not as much as it would normally.

SatvikBeri 8y ago

The chairman has the power to appoint members of the board, the board has the power to fire the CEO. So someone who's both chairman and CEO is virtually impossible to fire. The combination of removing Musk as Chairman and adding two independent directors means there's a slim chance that he could eventually be fired – more likely, it means that Musk will be held more accountable to the board.

snowmaker 8y ago

Not much, the Chairman role is mostly symbolic. This will not have any day-to-day consequences.

simonswords82 8y ago
Not true, I have a chairman, I answer to him and I don't have the SEC watching me. Elon's chairman will be under scrutiny by the SEC to keep an eye on Elon from the inside.

bigbadgoose 8y ago

I expect the stock to pop on Monday given this slap on the wrist