Tesla Inc. shares dropped sharply Friday after the electric-car company disclosed that its chief of accounting was leaving the company only weeks after coming aboard.
The upheaval in the executive ranks emerged hours after the company’s chief executive, Elon Musk, appeared live on YouTube taking a deep drag on what appeared to be a marijuana cigarette during an interview with comedian Joe Rogan, an advocate for legalizing marijuana.
In early trading, Tesla’s shares were off as much as 9 per cent. On Friday, the stock was trading around US$265 per share, down 30 per cent in the last month.
The hiring of the accounting chief, Dave Morton, had been announced days before Mr. Musk abruptly took to Twitter last month and declared that he was planning to take Tesla private and had "funding secured.”
But in a filing with the Securities and Exchange Commission on Friday, Tesla said Mr. Morton had given notice of his resignation Tuesday and that it was effective immediately.
"Since I joined Tesla on Aug. 6, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations,” Mr. Morton said in a statement included in the filing. "As a result, this caused me to reconsider my future. I want to be clear that I believe strongly in Tesla, its mission, and its future prospects, and I have no disagreements with Tesla’s leadership or its financial reporting.”
Mr. Morton had been hired from the data storage company Seagate Technology PLC to replace Eric Branderiz, who left Tesla in March.
Nearly a dozen top executives have left Tesla this year. Sarah O’Brien, vice-president for communications, and Gabrielle Toledano, the head of human resources, have departed in the last few weeks. Susan Repo, the treasurer and vice-president for finance, left in March.
The upheaval that began with the abortive bid to take the company’s shares off the public market has deeply dented Tesla’s stock – the shares have lost almost one-third of their value since early August – and brought new scrutiny of Mr. Musk’s behavior and managerial fitness.
The attention intensified overnight after his interview with Mr. Rogan, where the repartée included an exchange over what Mr. Musk was smoking.
"Is that a joint or is it a cigar?” Mr. Musk asked after his host took out a large joint and lit it up.
"It’s marijuana inside of tobacco,” Mr. Rogan replied and asked if Mr. Musk had ever had it.
"Yeah, I think I tried one once,” he replied, laughing.
The comedian then asked if smoking on air would cause issues with stockholders, to which Mr. Musk responded, "It’s legal, right?” and then proceeded to take a puff. Marijuana is legal for medical and recreational use in California, where the interview was recorded.
After Mr. Musk announced Aug. 7 that he intended to take Tesla private at US$420 a share, there was speculation that the billionaire was referring to marijuana when he tweeted, since "420” is a coded reference for marijuana.
In an interview with The New York Times, Mr. Musk denied the allegations.
"It seemed like better karma at $420 than at $419,” he said. "But I was not on weed, to be clear. Weed is not helpful for productivity. There’s a reason for the word ‘stoned.’ You just sit there like a stone on weed.”
On Aug. 24, more than two weeks after blindsiding employees and investors with the tweet, Mr. Musk decided to keep Tesla a public company.
"Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company,” he wrote in a blog post on the Tesla website. "Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was 'please don’t do this.’”
The sudden resignation of Mr. Morton as chief accounting officer could be of interest to securities regulators. The San Francisco office of the Securities and Exchange Commission is investigating not only Mr. Musk’s unusual tweet about having "funding secured” to take the car company private, but broader issues surrounding company disclosures about production goals with its latest offering, the Model 3.
Most employees at Tesla, as part of the application process, are required to sign a nondisclosure agreement that some have cited as reasons for not commenting publicly about their tenure at the company.
A copy of that agreement contains a clause regarding communication with government agencies about "Tesla’s confidential information,” that some employment lawyers said may be deemed objectionable. The clause said applicants and employees “must limit the disclosure to the maximum extent permissible.”
Stuart Meissner, an attorney who represents two former Tesla employees who have filed whistleblower complaints against the company with the SEC, said one of his clients raised an objection to the clause in his filed complaint. Mr. Meissner said he believes the clause has dissuaded current and former employees from coming forward to regulators with information about Tesla.
Ever since the bid to go private was abandoned, some investors have remained on edge as Mr. Musk continues to draw attention, often through impulsive outbursts on Twitter.
"It’s time for Tesla and Elon Musk to grow up,” Michelle Krebs, executive analyst at Autotrader, said Friday. “The company has problems, and it seems the board and investors need to start speaking up about how the company is being run. Maybe behaving like that is cool to some people but doing it while running the company with other people’s money is really not cool.”
A company spokesman, Dave Arnold, declined to comment.
Earlier this week Mr. Musk made a second round of unsubstantiated allegations against Vernon Unsworth, the British diver involved in the cave rescue operation that saved a group of Thai schoolboys in July, whom he had called a "pedo guy.”
Mr. Musk did not mention the incident in his interview on Mr. Rogan’s podcast, which lasted more than two hours. He appeared at ease, sipping whiskey, and spoke, at one point, about artificial intelligence and how it could not be controlled.
"You kind of have to be optimistic about the future,” said Mr. Musk, the head of the private rocket company Space Exploration Technologies Corp., or SpaceX, as well as Tesla. “There’s no point in being pessimistic. I’d rather be optimistic and wrong than pessimistic and right.”
Mr. Musk explained what it was like to be inside his head, calling it "a mutation” that leads to a constant flow of ideas that makes him invent things.
"At first I thought I was insane,” he said.
When asked about his activity on Twitter, he said he tried to ignore negativity on the platform and went on to describe his behavior as "on balance, more good than bad.”
"But there’s definitely some bad,” he added. "So hopefully the good outweighs the bad.”