Last Saturday it was announced that the Securities and Exchange Commission reached a proposed settlement with Musk over tweets he sent about taking Tesla private. As part of that settlement, Musk will pay a $20 million fine and step down as Tesla’s Chairman for three years. But the New York Times reports that the SEC offered Musk an even better, “extraordinarily generous,” settlement–but Musk turned it down. That settlement would have required Musk to only resign as chairman for two years and required a much smaller fine. As the Times reports:
It was a stunning reversal: The board had rejected a settlement that was extraordinarily generous — it would have allowed Mr. Musk to remain as chief executive, and required him to step down as chairman for only two years. Now, the company was at risk of losing Mr. Musk as chairman and chief executive if regulators prevailed in court.
But Musk threatened to resign on the spot if the board accepted the SEC’s offer. The board acquiesced and told the SEC there would be no settlement. Yet the next day, Tesla was back at the SEC “groveling” for another settlement offer, the Times says. They were there in part due to the fact that Tesla’s stock plunged 14% on the news of the original rejected settlement.
In the end, both Tesla and Musk will now have to pay the SEC a $20 million fine and Musk must resign as chairman of Tesla for three years. The company must also now appoint two independent directors and elect an independent director as chairman.