NEW YORK (Reuters Breakingviews) - Tesla can find a better chairman than James Murdoch. The outgoing chief executive of Twenty-First Century Fox is the leading candidate to oversee Elon Musk, the Financial Times reported on Wednesday. He’d be a better pick than any of the $44 billion electric-car maker’s other directors. But Musk’s tweet denying the story is a reminder that Tesla and its investors need a strong outsider to keep the boss under control.
Replacing Musk with an independent chair is required as part of a settlement with the Securities and Exchange Commission, which alleged Musk made false and misleading statements via Twitter about a potential buyout of the company.
Murdoch is one of only three Tesla directors who safely qualify as independent. The others have too much history with Musk. Murdoch also has experience as an executive at big public companies like Twenty-First Century Fox. True, he worked alongside his tycoon father, Rupert - but at least he knows how to deal with an entrenched shareholder-executive. Murdoch has no background in cars. though. And he had to step down as executive chairman of News International in 2011 after a phone-hacking scandal.
Moreover, Musk’s latest micro-missive reinforces how neither Murdoch nor the rest of the board has proved able to rein him in. Publicly commenting on the chairman search gives the impression that the chief executive is playing a central role, when he should have little to no say in it. Another part of the SEC deal requires the board to set up “additional controls and procedures to oversee Musk’s communications.”
To date, directors have either supported Musk – as they did after he rejected the initial settlement offered by the SEC – or remained silent about controversial remarks. They haven’t obviously curbed the CEO’s penchant for going public with unrealistic business targets, either.
That all makes appointing a respected outsider a better option than Murdoch. That could be former Ford Motor boss Alan Mulally, erstwhile Boeing CEO Jim McNerney or even a hard-nosed finance type like Goldman Sachs and White House alum Gary Cohn. Aside from tough love for Musk, improving investor relations, mass production and corporate finance are all on Tesla’s to-do list.
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