Coming under pressure from his lawyers and investors of Tesla, tech billionaire Elon Musk has agreed to step down as chairman of the company for three years and pay a $20 million fine in a deal with the U.S. stock market regulatory authority, Securities and Exchange Commission (SEC), to resolve securities fraud charges.
His words rang true as following the news of Musk's settlement with SEC, Tesla's stocks improved by 16% in pre-market trading.
Mr Musk, whose tweets on August 7 on a plan to take Tesla private that was later abandoned, has tweeted only once since the settlement was announced - posting a music video by rap group Naughty by Nature. Tesla itself has also been slapped with a $20 million fine by the SEC, making Musk's tweet one of the most expensive in history.
Now, the company has to hire a chairman to replace Musk (something corporate governance experts have suggested for years), along with 2 new independent directors. Some analysts had said that Musk's departure would harm Tesla's brand, fundraising abilities and stakeholders' confidence if the company lost its key visionary.
However, Musk has agreed to a condition where he will not admit nor deny if he was guilty of committing the securities fraud.
In fact, the biggest impact will be the new chairperson of Tesla.
Now the SEC problem is out of the way, Tesla and Musk still have to face off against two more legal obstacles. He still retains his role as Tesla CEO, and has a place on the board, but he will no longer be leading the company's board for the next three years.
Tesla founder Elon Musk is telling his employees to work hard on the last day of the quarter to prove "the naysayers wrong".
Tesla stock rose 17.3 per cent to $310.70 after a 14 per cent plunge on Friday, which left it slightly higher than it finished Thursday. Andrew Doane, who has a Model S sedan, Model X crossover and Model 3 vehicle and is president of the Tesla Owners Club of the Mid-Atlantic region, mustered club members to pull shifts at delivery hubs in Virginia and Maryland, and worked one himself.
Tesla must also hire an independent chairman to oversee the company. Musk and Tesla will each pay a $20 million fine. It appears that future production goals are reportedly 6,000 per week and eventually 10,000, which CEO Elon Musk targeted as a company goal by the end of 2018.