It’s Elon Musk’s company.
Of course it’s not really his company. Tesla (NASDAQ:TSLA) (TSLA) belongs to the shareholders, of which Musk is only one of many, though he does own the single largest chunk of shares – roughly 20% of the company.
He’s also no longer Chairman of the Board, thanks to a settlement with the SEC in which he agreed to relinquish that role after his infamous “funding secured” tweet.
It remains clear however, that the direction of Tesla as well as the culture that exists inside the company is still primarily controlled by the iconoclastic visionary who took the company from a niche electric car manufacturer to one of the biggest automakers in the world.
It was precisely that culture that was mentioned as the principal reason for the departure of Tesla general council Dane Butswinskas on Wednesday. After just two months in the GC role, the DC-based attorney will return to his role as partner at Williams (NYSE:WMB) and Connolly – the firm that also acts as Tesla’s outside council.
Butswinskas cited a “poor cultural fit” as a factor in his decision to leave, though he will continue working with the company in as outside counsel. He will be replaced by Jonathon Chang, who has worked in several roles in Tesla’s legal department for over seven years.
It’s the latest in a series of executive exits at Tesla over the past few years that included the senior VP of engineering, the head of human resources, and the CFO three times in the past three years – including the same person twice when Deepak Ahuja retired, returned to the CFO role after the departure of Jason Wheeler, then retired again earlier this year.
Often, investors see a pattern of executive departures as a sign that something is seriously wrong with the management or operations inside a company that the public isn’t aware of yet. Watching the crew bail off the sides of a ship Is a clue that it may be sinking.
That’s not the case at Tesla, however. There are no accounting irregularities, OSHA violation issues or legal problems. Paradoxically, Butswinskas’ resignation is actually confirmation of that. If a relative outsider accepted the General Counsel position and then left two months later, an observer might surmise that he became aware of dubious legal practices and decided he didn’t want to be a party to them.
Williams and Connolly has been employed by Tesla for several years, and Butswinkas was presumably intimately acquainted with the company’s legal strategies and issues long before he left the firm where he had spent the past 30 years to become Tesla’s general council. If there was anything amiss, he would have been amongst the first to know, well before he went to work there.
The problem instead seems to the constant demands of working for Musk. By all accounts, Tesla is not an environment where the phrase “I can’t…” is met with any sort of understanding. That’s exactly the philosophy that made Tesla’s improbable rise to mainstream automaker possible - even as similar competitors failed, and it doesn’t appear to have changed now that the company is producing more than 5,000 cars/week and has posted positive cash flows and net profits in two consecutive quarters for the first time in its history.
In fact, a high rate of turnover at Tesla is not only likely to be the norm going forward, it can actually be viewed as a positive indicator of progress. As the company continues to grow to 500,000 cars/year and beyond and pursues fully autonomous driving capabilities, Musk will continue to burn through talented individuals who eventually choose to take a breather from the torrid pace of change he demands.
When you see complacency in the C-suites at Tesla, with fat-and-happy executives hanging around to collect the spoils of their previous efforts, that’s the time to get worried.
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Tesla, Inc. (TSLA): Free Stock Analysis Report
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