Elon Musk's long legal nightmare with the SEC finally ended on Saturday after almost three whole days.
Elon Musk, under pressure from his lawyers and investors of Tesla, the company he co-founded, reached a deal with the Securities and Exchange Commission on Saturday to resolve securities fraud charges. The settlement will force Mr. Musk to step aside as chairman for three years and pay a $20 million fine.
After a few hours of posturing, Elon walked away without official control of his board and the SEC got to make a public show of strength and take a metaphorical pound of flesh from Elon that is actually a half pound of flesh...and it's being leased.
The terms of the settlement are slightly tougher than those that two people briefed on the talks said Mr. Musk had rejected on Thursday, which called for a two-year bar on serving as chairman and a $10 million fine.
Tesla, which is also settling with the S.E.C., will pay a $20 million penalty. The company was not charged with any fraud.
In addition, the company will add two independent directors and take steps to monitor Mr. Musk’s communications with investors. It will also create a permanent committee of independent directors to monitor disclosures and potential conflicts of interest.
Suspending Elon for "accidentally" doing securities fraud because he wanted to make his stoner girlfriend giggle is giving an adolescent punishment to an increasingly adolescent billionaire. Musk's behavior has become so routinely bizarre, cravenly showy and unsubtly begging for our attention that he's now the Kanye West of American business. But that's never been a problem for the board of Tesla because they've become effectively a bunch of Kardashians, basking in his earned, performative fame and hoping it will burnish their own.
Tesla is a car company wrapped up in a solar power company wrapped up in a cult of personality. "Independent directors" will be like foreign antibodies at Tesla, and there's no reason to think that the host body won't reject them. What the SEC is banking on - and what any smart TSLA shareholder better start praying for - is that the existing board members finally give up pretending that Elon Musk is the second coming of Henry Ford and actually make a move to cut back his power permanently. There might not be more tweets like the one that caused this slap on the wrist, but there will be something, and it would behoove the adult decisionmakers at a multi-billion public company to be ready to contain the genius billionaire playboy that enriches them when it does.
But don't take our word for the board needing to realize that Elon is never going to focus and become the corporate automaton they need; take Elon's:
Mr. Musk, according to people familiar with the negotiations, had been concerned about whether settling a civil fraud charge might affect the ability of Tesla and the other companies he runs, including SpaceX and the Boring Company, to raise money from investors in private placements and the debt markets.
And what about the flamethrowers?