Massachusetts Senator Elizabeth Warren is questioning whether Tesla’s board is protecting the electric car company’s shareholders in the aftermath of CEO Elon Musk’s $44 billion purchase of Twitter.
Tesla directors are legally bound to look after the interests of the company, workers and shareholders, the Democratic lawmaker wrote Monday in a letter to Robyn Denholm, chairman of the Tesla board. Yet Musk’s steps as the new Twitter CEO raise “questions about possible violations of securities or other laws,” Warren added.
Tesla, worth $1.2 trillion at the start of 2022, has shed about $700 billion in market value this year amid questions about Musk’s judgement and commitment to the electric-vehicle maker. The billionaire’s attention has been consumed by Twitter since its purchase in October, which has prompted him to sell almost $40 billion in Tesla stock to shore up investment in the money-losing social media network.
“Every board of directors of a company with multiple shareholders — especially publicly traded companies — is responsible for ensuring that a controlling shareholder (especially one who is also a chief executive officer, or CEO) does not treat the company as a private plaything,” Warren stated.
The senator called on the board to account for how it was “dealing with conflicts of interest, misappropriation of corporate assets and other actions by Mr. Musk that appear not to be in the best interest of Tesla and its shareholders.”
Those steps include pulling Tesla engineers and other key staff at the automaker to work at Twitter, Warren noted. She also cited the potential for conflicts of interest, given that Twitter relies on ad revenue from Tesla competitors such as Audi and Ford.
“Musk may decide to run the company to maximize badly-needed revenue, even if that includes great deals for Tesla’s competitors and potential injury to Tesla,” she stated. “Musk could decide he is personally better served if Tesla overpays Twitter for advertising or pays up front to give Twitter access to much-needed cash.”
The board is responsible for ensuring Musk is an effective CEO and acts in the best interests of Tesla and its shareholders, “not just himself,” Warren wrote.
“The fact that Mr. Musk was, until recently, the world’s richest man does not absolve him of those legal responsibilities,” she said, referencing Musk’s slide last week to the second spot on the Forbes and Bloomberg wealth rankings.
Tesla did not immediately respond to a request for comment.
The New York Times earlier reported on Warren’s letter.
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