They are old enemies.
Two enemies who like to fight each other.
Elon Musk and Senator Elizabeth Warren never pass up an opportunity to attack each other. This time, it was the former candidate for the 2020 Democratic primary who fired first, taking advantage of Musk’s misadventures.
On December 18, she wrote a letter to Tesla’s board of directors (TSLA) – Get a free reportaccusing Musk of a conflict of interest and possible misappropriation of the electric vehicle maker’s assets in connection with the billionaire’s $44 billion acquisition of Twitter.
“I am writing about concerns that Tesla’s board of directors has failed to comply with this legal duty regarding the actions of Tesla’s Chief Executive Officer, Elon Musk, in the wake of his purchase of Twitter,” Senator Warren (D-Massachusetts) wrote.
“I have a series of questions about how the Tesla board handles conflicts of interest, misappropriation of company assets, and other actions by Mr. Musk that appear not to be in the best interests of Tesla and its shareholders, so that I can assess whether current laws in such circumstances are adequate,” she continued.
‘Your legal responsibility’
She first wanted to remind the board that it is not his duty and role to protect Musk, the CEO, but the shareholders.
“Your legal responsibility is – as Tesla’s own public commitments state – ‘to serve as a prudent fiduciary to shareholders and to oversee the management of [Tesla’s] business,” said Warren. “That responsibility includes Mr. Musk being an effective CEO and complying with his legal obligation to act in the best interests of Tesla and all of its shareholders, not just himself.”
“The fact that Mr. Musk was until recently the world’s richest man does not relieve him of those legal responsibilities, nor is there any guarantee that he will comply. The basic structure of Mr. Musk’s deal to buy Twitter, and his actions since he became CEO, raise some concerns.”
The eight-page letter from Senator Warren, champion of the progressives, comes as a revolt from individual investors that has sprung up in recent days over their frustration that Tesla’s shares continue to fall in the stock market. Just before the letter was sent, Tesla’s market value was just over $474 billion, meaning nearly $640 billion in market cap had evaporated in 12 months. Shares of Tesla traded at $150.23, representing a 57.4% year-over-year decline.
It is now down to $148.29 at the time of writing.
For many private investors, this drop in share price is largely due to Musk leaving Tesla to focus on Twitter, whose funding forced him to take on $13 billion in personal debt.
“Elon has now cleared $600 billion in Tesla wealth and still nothing from the Tesla BOD,” Ross Gerber, one of Tesla’s most outspoken shareholders, denounced on Twitter on Dec. 16. “It’s completely unacceptable.” BOD stands for Board of Directors.
On December 19, Gerber commented on a message from Senator Warren criticizing the Tesla board.
“Wake up Tesla BOD! $TSLA,” the investor wrote.
Conflict of interest
In her letter, the senator questions the fact that Tesla employees were employed to work for Twitter and does not seem to accept Musk’s explanation that it was voluntary.
Nearly 50 Tesla employees, mostly software engineers from the Autopilot team, including Tesla’s Chief Information Officer, the Director of Software Development, the Director of Software Engineering, the Autopilot Project Manager, the Senior Manager of DevOps, and a senior security intelligence manager , went to Twitter’s headquarters in San Francisco.
“This use of Tesla employees raises obvious questions about whether Mr. Musk is appropriating resources from a publicly traded company, Tesla, for the benefit of his own private company, Twitter,” Senator Warren said. This would, of course, violate Mr. Musk’s legal duty of loyalty to Tesla and raise questions about Tesla’s board of directors’ responsibility to prevent such actions, and may also violate other ‘anti-tunneling’ rules intended to to prevent company insiders from extracting resources from their companies.”
She ended by asking the board twelve questions about the measures taken to prevent conflicts of interest.
“What specific guardrails and oversight has the board put in place to ensure Mr. Musk fulfills his fiduciary and management responsibilities at Tesla while also conducting operations at Twitter?” was one of the questions Senator Warren asked.
You can read the full letter here.
Musk’s response was quick. It was as damning as his opponent’s letter.
“The United States has certainly been hurt by having fun with her as a senator,” the billionaire responded on Dec. 20.