Musk will resign as chairman of Tesla and pay $40 million as settlement
The electronic-car manufacturing company, Tesla is synonymous to the name of Elon Musk, the billionaire and Chief Executive of the company. Therefore, it is will be unbelievable to see Musk will resign as chairman of Tesla. But the circumstances did not allow any alternative course of action.
The United States Securities and Exchange Commission (SEC) said on Thursday that car-maker Tesla and Chief Executive Elon Musk had agreed to pay $20 million each under a settlement that will also see billionaire, Elon Musk, step down as chairman after a tumultuous two months for the company.
But a ray of hope still shined for Musk under the settlement. He will continue on as the Chief Executive of the company. All of this happened over tweets he posted on the 7th of August 2018. These tweets were regarding taking the company private.
The SEC alleged in the lawsuit on Thursday that the tweets about financing for a go-private plan he abandoned just weeks later had no substantial basis. There was a huge market chaos due to this tweet. This chaos severely hurt the investors.
Elon Musk will resign as chairman of Tesla within 45 days. He is also not permitted to be re-elected to the post for a term of three years. Tesla is also required to appoint two new independent directors to its board.
The SEC originally demanded that Musk should be barred from running Tesla. On Saturday, the SEC withdrew this demand, to the relief of the defending party. That is because this sanction would have been disastrous for the loss-making electric carmaker.
It is now evident that Musk will resign as chairman of Tesla and pay $20 million for the damages that he has caused to the investors. But due to his power and popularity, in the end it was not possible for anyone to completely remove his presence from the company.
