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Abu Dhabi, UAESunday 21 October 2018

FT says James Murdoch in line for Tesla chair, but Elon Musk denies report

The electric car company has until November 13 to appoint an independent chairman of the board

Elon Musk stands on the podium as he attends a forum on startups in Hong Kong. REUTERS
Elon Musk stands on the podium as he attends a forum on startups in Hong Kong. REUTERS

Outgoing Twenty-First Century Fox Inc Chief Executive James Murdoch is the lead candidate to replace Elon Musk as Tesla Inc chairman, the Financial Times reported on Wednesday, but Musk in a tweeted reply to the newspaper said, “This is incorrect.”

Tesla has until November 13 to appoint an independent chairman of the board, part of settlements reached last month between Tesla, Mr Musk and US regulators in the wake of Mr Musk tweeting in August that he had secured funding to take the electric car maker private.

The SEC settlement capped months of debate and some investor calls for stronger oversight of Musk, whose recent erratic public behaviour raised concerns about his ability to steer the money-losing company through a rocky phase of growth.

The US Securities and Exchange Commission, which said Mr Musk’s tweeted statements about going private were fraudulent, allowed the billionaire to retain his role as CEO while requiring he give up his chairmanship.

Mr Musk had said he was considering taking Tesla private at a price of $420 a share, a number that is slang for marijuana. He tweeted the three-word denial of the Financial Times story, on Wednesday at 4.20pm (Pacific Time), about six hours after the newspaper’s post.

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

The Financial Times cited two people briefed on discussions saying Mr Murdoch was the lead candidate for the job.

Mr Murdoch, already an independent director of Tesla, has signaled he wants the job, the report said.

The son of Fox mogul Rupert Murdoch, he joined Tesla’s board last year after years of work with media companies. He has no experience in manufacturing and has never led a company that makes cars or electric vehicles.

Mr Murdoch could not immediately be reached for comment. Tesla did not respond to a request for comment. Twenty-First Century Fox declined to comment.

Mr 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 U.S. automakers with billions in revenues and the company has garnered legions of fans, despite repeated production issues.

Tesla faces a crucial moment as it struggles to produce its Model 3 sedan in large volume and deliver it quickly to customers amid an ongoing cash crunch that has concerned some analysts. Mr Musk has vowed that the loss-making company will be profitable and cash flow-positive in its third and fourth quarters.

Concerns about Mr Musk due to production delays and manufacturing challenges have been exacerbated by a series of damaging actions, including Mr Musk insulting analysts on a conference call, calling a British cave rescuer a paedophile, and joking on April Fool’s Day that Tesla was going bankrupt.

Shares are down 20 percent since the beginning of the year.

“Elon Musk is building a great company but has been erratic to say the least when it comes to thinking about his investors,” said Chaim Siegel, an analyst at Elazar Advisors. “The company needs some added stability at the top to win back investor confidence.”

Under terms of the SEC settlement, Musk is not permitted to be re-elected to the chairman’s post for three years. Tesla is also required to appoint two new independent directors to its board.

With US stock markets broadly lower, Tesla shares closed down 2.3 percent at $256.88.