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James Murdoch reportedly in line to replace Musk as chairman of Tesla board

Russ Mitchell, Los Angeles Times on

Published in Business News

James Murdoch, already a member of Tesla's board of directors, has been identified by London's Financial Times as the candidate favored to replace Elon Musk as chairman of the electric car maker.

Under a Sept. 29 settlement reached with the U.S. Securities and Exchange Commission over a Musk tweet that falsely claimed he had "funding secured" for a deal to take the company private, Tesla agreed to name a new chairman, while letting Musk stay on as chief executive. Tesla also agreed to add two independent directors to its board.

Murdoch is the son of media baron Rupert Murdoch. He served as chief executive of his father's company, 21st Century Fox, but plans to move on to other ventures when the bulk of Fox is sold to Walt Disney Co. That $71.3-billion deal is expected to close early next year.

The Financial Times story quoted unnamed sources and said Musk himself favored his friend and early investor Antonio Gracias for the role. Outsiders also were being considered for the chairman's job, according the newspaper.

The publication did not identify who considered Murdoch as the "leading candidate" to head the board. It cited as sources "two people briefed on the discussions," leaving open the possibility that someone is sending up a trial balloon.

If experts in corporate governance had a vote, the board would have to keep looking.

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"Naming an existing director who was on duty during all Musk's missteps and has no experience scaling up manufacturing at a cash-constrained company will not bolster confidence in Tesla's future," said Erik Gordon, a professor at the University of Michigan's business school.

Don't expect Murdoch to assume the role of reformer, said Charles Elson, a finance professor at the University of Delaware.

"He's a legacy director, from the same group that's been so deferential toward Mr. Musk," Elson said. "I wouldn't expect anything to change as long as Mr. Musk is on the board."

Tesla shares dropped $5.92, or 2.3 percent, to $256.88 on Wednesday, when the overall market was off 3 percent to 4 percent.

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