James Murdoch in line to replace Musk as Tesla chairman: FT

Irving Hamilton
October 11, 2018

That's largely because a judge in Manhattan in 2011 rejected a settlement between the SEC and Citigroup Inc., only to see his ruling reversed by an appeals court that gave judges in future cases very little wiggle room when weighing such deals.

Musk was required to step down last month as chairman of the electric auto company he founded, as part of a settlement with the US Securities and Exchange Commission.

James Murdoch is being touted as a front runner to take over as chairman of Telsa. The tech billionaire accepted a $20m fine and agreed to step down as chairman as part of the settlement.

Observers noted that the joke-loving Musk posted his tweet denying the FT's story at 4:20 p.m. PT - the time set aside in pot culture for toking up.

In a vote of confidence for Musk, shareholder T. Rowe Price Group Inc said in a regulatory filing on Wednesday that it had raised its stake by almost half to 10.2 per cent at the end of September from just under 7 per cent in June.

Tesla's board has been criticized for lacking independence, and while Murdoch has frequently sided with Musk in matters before the board, he remains financially independent in a way that the other major candidate for the job, Antonio Gracias, isn't.

The SEC said it weighed the seriousness of the alleged violations and their impact on the market against the willingness of Tesla and Musk to settle and their lack of financial gain from the conduct, according to the filing.

The Tesla board is understood to have not yet made a final decision about Musk's successor and may still appoint an external candidate. He has no experience in manufacturing and has never led a company that makes cars or electric vehicles.

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From the FT: "Tesla directors, including Mr Murdoch, issued a ringing endorsement of Mr Musk after he first rejected a settlement of the SEC fraud charges, a move that was widely condemned by boardroom experts and wiped 14 per cent off the company's share price". Tesla did not immediately respond to a request for comment.

This news comes on the heels of word that James is stepping down after the sale of 21st Century Fox's assets to Disney wraps up.

Musk is the public face of Tesla, and any chairman would have to contend with his powerful personality. Thanks to his vision and audacious showmanship, Tesla's valuation has at times eclipsed that of traditional, established USA automakers with billions in revenues and the company has garnered legions of fans, despite repeated production issues.

The younger Murdoch and Elon are reportedly friends, with the former having joined Tesla's board a year ago as one of a pair of new independent directors.

Earlier this year, the leading USA proxy advisors Glass Lewis & Co and International Shareholder Services, along with the union-affiliated investment advisor CtW Investment Group, all recommended that investors vote "against" Mr Murdoch's re-election as a Tesla director during the companies annual June 5 meeting.

Its shares have struggled amid the recent controversy, trading around $259.52 at the time of writing, around a 27% fall since Musk tweeted his intention to take the firm private at $420 a share. His brother Lachlan Murdoch will become CEO of "New Fox". He also stepped down as chairman of Sky after its takeover by Comcast.

In 2012 he was forced out as chairman of Sky, previously BSkyB, after the infamous phone-hacking scandal. He resigned from the board of Sky plc, just yesterday.

"I would still have reservations about the time he would be able to allot to this", Keatinge said, referring to the possibility of Murdoch as Tesla chairman.

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