Tesla has identified, but not named, the person they expect will lead the carmaker should billionaire Elon Musk step down from his role as CEO.
Tesla (TSLA) – Get Free Report shares nudged modestly higher Thursday after court testimony in a lawsuit liked to a pay deal agreed with CEO Elon Musk indicated a potential successor has been identified to eventually lead the electric vehicle maker.
James Murdoch, the son of media billionaire Rupert Murdoch and a member of the Tesla board, told the Delaware Chancery that, over “the last few months” Musk has decided who may replace him as CEO were he to leave, or retire from day-to-day operations, the company he effectively co-founded. The person was not identified by name.
The testimony formed part of a discussion over the time Musk is spending with Twitter, the social media group he purchased last month for $44 billion, and the subsequent impact it’s having on Tesla’s leadership. Murdoch said the company’s audit committee would be need to be “very aware” if Musk’s efforts were “taking away from Tesla work”.
Musk, for his part, Tweeted late Wednesday that he expects to continue as Twitter CEO — of Chief Twit, as he has dubbed himself — as the turnaround project there will “take some time”. Musk also told the Chancery that while there’s “an initial burst of activity needed post-acquisition to reorganize the company … I expect to reduce my time at Twitter” afterwards.
The court case itself was brought Tesla investor Richard Tornetta, who has sued the company over a $56 billion pay deal reached with Musk in 2018..
Tornetta — owner of just nine shares in the group — has alleged that a pliant board allowed Musk to reap the world’s biggest compensation package, with easy-to-reach performance targets, while still dividing his time and attention to other companies, including Space-X and The Boring Co.
In a curious twist, the case is being overseen by Delaware Chancery Judge Kathaleen McCormick, who would have presided over Musk’s attempt to walk away from his Twitter acquisition had his that deal not been completed last month.
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Tesla shares, which have fallen more than 50% since Musk made his Twitter purchase public in early April, were marked 0.4% higher in pre-market trading to indicate an opening bell price of $187.65 each.
Last week, longtime Tesla bull Dan Ives of Wedbush removed the electric carmaker from his ‘best ideas’ list citing what he called the “albatross” of Elon Musk’s $44 billion Twitter takeover.
Ives said Tesla investors face “a very nervous few months” awaiting Tesla’s fourth quarter delivery figures as Musk focuses his attention on Twitter and it myriad issues, and lowered his price target on the stock by $50, to $250 per share, while maintaining his ‘outperform rating’ in a scathing note that included pointed attacks on Musk’s recent social media ambitions.
“In what has been a dark comedy show with Twitter, Musk has essentially tarnished the Tesla story/stock and is starting to potentially impact the Tesla brand with this ongoing Twitter train wreck disaster,” Ives wrote.
Musk, who is financing part of the $44 billion required to buy the social media website through his personal stock holdings, sold 19.5 million Tesla shares between November 4 and November 7, at prices ranging between $197.196 and $208.731 per share, across a total of twelve transactions that raised $3.95 billion.
Earlier this summer, Musk sold 7.92 million shares between August 5 and August 9, netting a total of around $6.9 billion, taking advantage of a 47% rally in Tesla shares from late May to August 5, when the first sale was made. He sold another $8.5 billion in April.
Musk told Tesla investors last month that he and his investor group were “obviously overpaying” for the social media group, with overall costs pegged at $46.5 billion.