The electric-car maker has been forced to find an independent chairman to replace Elon Musk as part of a $40 million accord with the SEC to settle fraud charges related to his tweets about taking Tesla private. The company also will have to add two new independent directors and implement controls to oversee the communications of its outspoken chief executive officer.

It’s a shakeup that’s long overdue to many investors, proxy advisers and academics who’ve blasted Tesla’s board for being rife with conflicts and serving as an inadequate check on their visionary CEO. The 47-year-old billionaire has made a series of unforced errors lately that have risked distracting the money-losing company’s employees just as they’re seeking to mass-manufacture and deliver cars at scale for the first time.

In the weeks since sending ill-conceived tweets last month about buying out stockholders at $420 a share, Musk smoked marijuana in an interview with a comedian and was sued for defamation by a cave diver he called a pedophile. The blunders coincided with an exodus of senior executives and sell-offs of Tesla shares.

All the while, Tesla board members have issued multiple statements saying they continue to back Musk. The nine-director board includes Musk; his brother, Kimbal; and four longtime business associates.

“The addition of two more directors will have the effect of muting his dominance,” Stephen Diamond, an associate professor of law at Santa Clara University who specializes in corporate governance, said of Musk.

Musk’s Email

Hours after Musk settled with the SEC and Tesla resolved a charge that it failed to put in place disclosure controls and procedures relating to the CEO’s tweets, he emailed employees to cheer on their frantic push to boost vehicle deliveries before the third quarter ends on Sunday.

“We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday),” Musk wrote to staff. “If we go all out tomorrow, we will achieve an epic victory beyond all expectations.”

Tesla’s settlement with the SEC requires that the company pre-approve any written communications that could contain material information, including but not limited to his tweets.

The accord reached separately with Musk was more stringent than terms he walked away from on Thursday, the New York Times reported. The $20 million penalty he agreed to pay was double what was on the table earlier, and a year was added to his ban on becoming chairman again.

Chairman Proposal

The SEC secured a concession from Musk and the board that an individual investor sought at the company’s annual meeting in June. Shareholders defeated a proposal to require that the chairman of the company be an independent director, with about 83 percent of votes cast against the measure.

Adding an independent chairman at Tesla has the potential to more clearly distinguish the traditional roles of the board and management. While the CEO focuses on operations, an independent leader of the board could more effectively serve as a check on strategy and decision-making.

Three board members — Antonio Gracias, a private equity firm founder; Kimbal Musk, a food industry entrepreneur; and James Murdoch, the CEO of Twenty-First Century Fox Inc. — also won re-election in June despite a campaign waged against them by CtW Investment Group. The union pension fund-affiliated activist had argued that issues including missed Model 3 production targets showed the board had insufficiently governed Musk and the company.

CtW also chastised Gracias, Tesla’s lead independent director, for failing to insist on the resignation from the board by Steve Jurvetson, who parted ways with the venture capital firm he co-founded after allegations of misconduct emerged in November of last year. He’s remained on leave as a director.

A year earlier, Tesla shareholders sided with the board in defeating a proposal put forward by a group of Connecticut pension funds that would have required directors to face re-election at each annual meeting, rather than serve staggered three-year terms.

SolarCity Conflicts

Some investors also took issue with directors’ coziness with the CEO during the lead-up to Tesla’s 2016 acquisition of SolarCity Corp. Musk’s cousins ran the money-losing solar-panel installer, and Musk owned more than 20 percent of both businesses at the time of the deal. Proxy adviser Glass Lewis & Co. called it a “thinly veiled bailout plan” in which Tesla paid $2 billion and took on SolarCity’s $2.9 billion debt load.

“It’s not often that an SEC lawsuit could be viewed as an opportunity, but this is one of those rare cases,” Gene Munster, a managing partner at venture capital firm Loup Ventures, wrote in a report Saturday. Al Gore, the 2000 U.S. presidential runner-up and Apple Inc. director, or Jim McNerney, the former CEO of planemaker Boeing Co., could be good candidates to be put in charge of Tesla’s board, he said.

“The open board chairperson role creates an opportunity for Tesla to potentially put someone in place that is capable of influencing Musk and helping Tesla reach sustainability,” Munster said.