Tesla Accounting Chief Quit After Elon Musk Ignored Pitfalls of Going Private

Elon Musk,CEO of Tesla
Getty/ Robyn Beck

Dave Morton, Tesla’s now-former Chief Accounting Officer, resigned over concerns that executives were uninterested in addressing problems associated with taking the embattled electric automotive company private.

In a statement released Friday, Morton, who quit Tesla on September 4, said his departure was prompted by increased levels of public scrutiny surrounding the car company. “Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations,” Morton said in a statement. “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.

Following Musk’s “funding secured,” tweet on August 7, Morton walked the erratic billionaire through the pitfalls of taking Tesla. “He brought up specific details such as equity change of control provisions and potential step-ups in the value of Tesla’s debt associated with a new controlling shareholder,’ CNBC’s Alex Sherman writes. “When Morton offered advice about capitalizing the company through other means rather than going private, he was ignored, said the people.”

Two weeks into his job as Tesla’ head accountant, Morton determined neither Musk or other executives were interested in receiving his advice on going private and began to consider quitting the Palo Alto-based company.  According to regularity filings reviewed by Bloomberg, Morton, whose annual base salary was $350,000, walked away from a $10 million “new-hire equity grant,” said to vest over a four-year period. Morton had taken over for the company’s previous account head, Eric Branderiz, who resigned on March 7 citing “personal reasons.”

Shortly after Morton’s resignation became public, Gaby Toledano, Tesla’s Chief People Officer said she would not be returning after taking a 15-month leave of absence on August 15.

“Toledano’s leave follows the departure of Sarah O’Brien, who headed up Tesla’s communications team. Laurie Shelby, who heads the company’s environmental, health and safety efforts, and Cindy Nicola, head of global recruiting, are the last remaining female executives at the company,” reported TechCrunch at the time of the announcement. Doug Field, the company’s Senior Vice President of Engineering exited the company for “personal reasons,” in July after taking a leave of absence.

The pair of resignations come as Citron Research editor and famed short seller Andrew Left is suing Tesla for breaching federal securities law. Left says that Musk falsely claimed that the company received secured funding to go private in a scheme to intentionally boost its stock price. “This appears to be a textbook case of fraud,” Michael Canty, a lawyer for Left, said in a statement. “We believe Musk attempted to manipulate the price of Tesla securities with false and misleading tweets, in a directed effort to harm short-sellers.”

In August, Musk announced in a blog post that Tesla had abandoned plans to go private. “I worked with Silver Lake, Goldman Sachs and Morgan Stanley, who have world-class expertise in these matters, to consider the many factors that would come into play in taking Tesla private, and to process all the incoming interest that we received from investors to fund a go-private transaction,” wrote Musk. “After considering all of these factors, I met with Tesla’s Board of Directors yesterday and let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree.”

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