Tesla (TSLA) informed us Friday that Chief Accounting Officer Dave Morton resigned on Tuesday, having been on the job since just Aug. 6 -- the day before CEO Elon Musk sent out the first of those famous "going-private" tweets. The 8-K announcing Morton's departure is one of the strangest things I've come across in my career.
For one thing, I'm assuming that Morton left everything on the table and just walked out. That would appear to include a $10 million stock grant that would have vested over four years, as per a previous U.S. Securities and Exchange Commission filing.
It's also worth noting that Tesla announced Morton's hiring a week before he starting with the company, but waited three full days to announce that he already left. And Morton certainly isn't a job-hopper. The 46-year-old had just spent 23 years -- or half of his entire life -- at Seagate Technology (STX) .
Presumably, that means it would have gone against every fiber in Morton's body to leave his new employer after less than a month. So while Morton wrote in his resignation letter that "I have no disagreements with Tesla's leadership or its financial reporting," I personally think that whatever he saw when opening the books scared him stiff.
In any case, the bigger story is this -- here's someone who must have been enthralled by Tesla's product story, its CEO or both. In fact, Morton wrote in his resignation that "I believe strongly in Tesla, its mission, and its future prospects."
The executive sure didn't go to Tesla for the money, given that he ran out the door in less than a month when he could have hung around and collected $10 million in stock. Instead, it's obvious that what Morton saw on the job didn't match his expectations. It's like that scene in the movie The Girl With The Dragon Tattoo, when the girl sees something that causes her to escape with the greatest urgency.
Whatever it was that Morton saw, the SEC -- which is reportedly investigating Musk's go-private tweets -- could have plenty of questions for him. Regulators could also have questions for Morton's predecessor Eric Branderiz, who left the company six months ago.
Now just as with the general public, there are many people among Silicon Valley's managerial and investment professionals who are indeed enthralled by Tesla's cars and its CEO. They seem to think that as long as the product is cool and Musk talks about going to Mars (via his side company SpaceX), it's somehow all going to work out.
However, bond covenants and other debt repayments don't just "work out." They're hard constraints, and I'm guessing it took Morton less than a month to figure out that a Tesla Model 3's 0-60-mph acceleration time won't solve the issue of company debt payments that are coming due.
That's why Tesla's August 2025 bond, originally issued at 5.3%, is now trading at about 8.5%. A $83.50 bond price isn't good and doesn't encourage any other bond investors to refinance Tesla's debt.