Elon Musk stepping down as Tesla chairman
New York (CNN Business)Elon Musk will buy another $20 million of Tesla stock with his own money, covering the cost of the fine the company has to pay for his tweets.
Musk and Tesla each agreed last month to pay $20 million to settle a federal lawsuit. The SEC alleged Musk misled investors when he tweeted on August 7 that he had “funding secured” to take Tesla private.
As part of the SEC settlement, Musk also agreed to give up his position as chairman of Tesla, although he will remain CEO. The company will add new independent board members and have greater oversight of Musk’s communications with the public.
The settlement was approved by a federal judge late Monday.
Musk’s share purchase is unusual — for CEOs, not for him. Most executives do not spend their own money to buy shares of their companies’ stocks at market price. But Musk also purchased shares with his own cash in May and June.
Unlike those previous instances, Musk will buy his latest round of shares directly from Tesla (instead of on the open market). That means the money will go directly to the company. In a regulatory filing, Tesla did not say explicitly that Musk’s stock purchase was to pay for Tesla’s fine, but the value of the stock purchase matches the fee. Tesla declined comment on the purchase.
Musk’s $20 million commitment is relatively small: It will increase his Tesla stake by only 0.2%. Still, Tesla (TSLA) shares initially rose on the news Wednesday. But the stock turned negative on a report of another executive departure from the company.
Gilbert Passin, Tesla’s vice president of engineering, left the company months ago, a person familiar with his departure told CNN Business. Passin’s departure was first reported by Business Insider. Tesla would not comment on his departure, and Passin could not be reached for comment.
Passin had been with Tesla for more than eight years, since the company was first starting production of the Model S. He is a veteran of Toyota, Volvo Trucks and Mack Trucks,
Executive departures at Tesla have concerned investors. Tesla’s director of field performance engineering and senior vice president of engineering recently left the company. The chief accounting officer quit after less than a month on the job.
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