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James Murdoch in line to replace Elon Musk as Tesla chair

The Financial Times logoThe Financial Times 11/10/2018 Matthew Garrahan and Peter Campbell in London and Richard Waters in San Francisco

© Getty James Murdoch has become the favourite to succeed Elon Musk as the chairman of Tesla, which must replace the electric carmaker’s founder in the role by the middle of next month.

Mr Musk agreed to leave the role as part of a settlement with the Securities and Exchange Commission lawsuit over claims he broke securities laws in August with a tweet saying he had “funding secured” to take Tesla private. He will stay on as chief executive.

Two people briefed on the discussions said Mr Murdoch, a non-executive director of Tesla, was the lead candidate for the role, which is required by the SEC to be an independent chairman. Another person said external options were still being considered.

Mr Musk initially refused to comment. Several hours after the publication of the FT’s report, however, he responded to an FT post on Twitter about Mr Murdoch being the lead candidate with a terse tweet in reply: “This is incorrect”. He did not immediately answer a follow up request for information.

© AP Mr Musk is known to favour Antonio Gracias, Tesla’s lead independent director, but has been advised Mr Gracias may not be sufficiently independent because of his involvement with Mr Musk’s companies. Mr Gracias’ firm, Valor Equity Partners, invested in Tesla in 2005, selling its shares in the company’s IPO in 2010. He also invested in  SpaceX, Mr Musk’s rocket business. 

Mr Murdoch referred calls to Tesla, which declined to comment. However, people familiar with the discussions said Mr Murdoch had signalled that he wanted the job. 

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Mr Murdoch, who will step down as chief executive of 21st Century Fox when the media group completes the  sale of its entertainment assets  to Walt Disney, is considering setting up a technology investment fund. He has also stepped down as chairman of Sky following  its recent sale to Comcast.

“The Tesla chairman job is perfect for James,” said one person briefed on the conversations. “He’s working on this fund and will be sitting next to Elon . . . he’s going to get access to so much deal flow.”

In a recent onstage interview at a Goldman Sachs conference, Mr Murdoch spoke warmly about Mr Musk and his time as a Tesla director. 

“It’s been a really fascinating experience,” Mr Murdoch said. “What’s exciting about the company and about Elon is the goals are so audacious. He’s an entrepreneur who has some really audacious goals about what can be created and what can be settled for.”

Mr Murdoch, a friend of Mr Musk, joined Tesla’s board last year as one of two new independent directors brought in to strengthen a board that has frequently been criticised for bowing to Mr Musk’s wishes. But the appointments have had no effect on the mercurial Mr Musk this year, and Mr Murdoch has participated in recent decisions that have brought more scorn on the board.

Tesla directors, including Mr Murdoch, issued a ringing endorsement of Mr Musk after he first rejected an SEC deal, a move that wiped 14 per cent off the group’s shares.

Mr Musk has until mid-November to find a replacement having been given 45 days to step down as chairman when he agreed his settlement with the SEC last month.

However, the SEC agreement states that the 45-day deadline can be extended at the request of Mr Musk. 

Additional reporting by James Fontanella-Khan in New York and Arash Massoudi in London 

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