(Reuters) – Tesla Inc on Friday named Oracle Corp co-founder Larry Ellison, a shareholder and self-described close friend of Chief Executive Elon Musk, to its board to provide the independent oversight demanded by U.S. regulators after Musk tweeted about taking the electric carmaker private.
Tesla said Ellison and Walgreens Boots Alliance’s global head of human resources, Kathleen Wilson-Thompson, joined the board as independent directors, effective Dec. 27.
Musk on Aug. 7 tweeted that he was considering taking the company private and had secured funding. The SEC subsequently filed fraud charges against him, citing what it said were his “false and misleading” tweets.
Under a court-approved agreement with the U.S. Securities and Exchange Commission, Musk agreed to pay a $20 million fine and step aside as Tesla’s chairman for three years to settle charges that could have forced his exit. Tesla also agreed to pay a $20 million fine.
Tesla further consented to the appointment of an independent chairman, two independent directors and a board committee to control Musk’s communications.
Prior to his Tesla appointment, Ellison did not sit on boards other than Oracle’s. But he served as a director at Apple at a critical time for that company – in the five years after Steve Jobs returned to the helm of the then struggling computer maker in 1997, helping oversee one the greatest turnarounds in corporate history.
Some analysts welcomed the addition of Ellison, but Charles Elson, director of the corporate governance center at the University of Delaware, questioned adding a friend of Musk’s and another director with no experience at an industrial company like Tesla.
“Why would you put a friend (on the board) if the idea of the two independent directors were to be objective,” Elson said. “Investors who were hoping for two newly objective directors who could stand up to Mr. Musk would be rather disappointed by the choice.”
One analyst, though, viewed Ellison’s appointment as a positive. “Larry Ellison obviously has a tremendous presence in Silicon Valley … with maverick type CEO traits very similar to Elon Musk, so he brings a level of understanding because he has gone from a startup to a successful company similar to Tesla,” Tigress Financial Partners analyst Ivan Feinseth said in an email.
“I don’t believe he would let friendship get in the way of good judgment,” Feinseth added about Ellison.
Ellison bought 3 million shares of Tesla earlier this year. Through a spokeswoman, he declined to comment.
Tesla’s shares were up 4.8 percent at $331.49 in Friday afternoon trading.
Musk on Friday afternoon tweeted his welcome: “Excited to have Larry Ellison & Kathleen Wilson-Thompson join the Tesla board!”
In November, Tesla named director Robyn Denholm as board chair, fulfilling one of the demands. Denholm, who joined Tesla as an independent director in 2014 and agreed to step down as finance chief of Australian telecoms firm Telstra Corp Ltd, spent 11 years as a senior vice president at Sun Microsystems, a unit of Oracle.
Tesla said it conducted a “thorough, expansive” search process for the directors, calling Ellison a “preeminent entrepreneur” and Wilson-Thompson “a human resources leader” and said both had a passion for sustainable energy. They bring the Tesla board count to 11 people.
The larger-than-life Ellison, like Musk, is known for making bombastic, brash public comments. He went on a diatribe attacking cloud computing at a 2008 analyst conference, which only served to highlight Oracle’s slow move into the space. He undermined Oracle’s business relationship with Hewlett Packard in 2010 in an email to the New York Times that chastised the board for firing its CEO and his friend, Mark Hurd, after a sexual harassment inquiry.
He rarely interacts with journalists or blogs, and has only Tweeted once – a 2012 message promoting Oracle’s cloud products.
“VERY CLOSE FRIENDS”
Ellison, said by Forbes magazine to be worth $55 billion, has in the past defended Musk.
“I’m very close friends with Elon Musk, and I’m a big investor in Tesla,” Ellison, 74, said on a Oct. 26 conference call with analysts.
“This guy is landing rockets,” Ellison added about Musk, referring to his leadership of SpaceX. “He’s landing rockets on robot drone rafts in the ocean, and you’re saying he doesn’t know what he’s doing. Well, who else is landing a rocket?”
Wilson-Thompson, who could not be immediately reached for comment, spent 17 years at Kellogg Co before joining Walgreens, and serves on the boards of two U.S.-based manufacturing companies.
Musk has gained fans for his bold approach to business and technology, using his almost 24 million Twitter followers to promote Tesla, SpaceX and tunnel venture Boring Co.
But the August claim that he had the funding to take Tesla private, and a subsequent U-turn, stunned Wall Street and came as Musk was filmed briefly smoking marijuana during a live Web show and when he called a British diver in the Thai cave rescue a “pedo.”
Tesla’s market cap exceeds that of traditional, established U.S. automakers that make millions of vehicles and billions of dollars in profits annually, and the company has garnered legions of fans despite repeated production issues.
(This story was refiled to correct the transposition of words in paragraph 1)
Additional reporting by Jim Finkle, Katanga Johnson and Akanksha Rana; Editing by Sriraj Kalluvila and Steve Orlofsky