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Public Companies Taking Federal Assistance Money are Taking Heat

May 3, 2020

Last week, Congress passed another stimulus bill designed in part to replenish the Paycheck Protection Program that provides loans to assist small businesses (businesses with 500 employees or less). The new loans became available to consumers earlier this week, and the launch was mired with technical glitches. This is the second round of such funding; the first of which ran out within days. The takers of the first round of stimulus included larger public companies (like restaurants with 500 or fewer employees at any given location) which arguably had access to other forms of capital (like equity or debt raises). Public outcry over these public company loans was so severe that a number of the companies (led by Shake Shack) voluntarily began returning the loans to the government. The Treasury Department stepped in as well, urging public companies to return the loans and hypothesizing that in many instances the attestations signed by some of the public companies in order to receive the loan were untruthful. Out of the gate, the certifications required by each company receiving a PPP loan were “relatively broad and unclear” and have since been updated “in a way that would force some larger and public companies to return the money”. The Treasury Department noted that “’(i)t is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith’” and could face regulatory scrutiny if they do not return and/or take the loans.

Tesla’s D&O Insurance No-Go and Elon Musk’s Thoughts on Shelter-in-Place

Tesla and its outspoken CEO have been in the news this week. First, Tesla released its amended annual report on Tuesday. The company disclosed that it did not renew its D&O program this year as the cost of the insurance was through the roof. Instead, the company’s CEO, Elon Musk, has contractually agreed to personally provide indemnification for directors of the company. Legal scholars were quick to point out that this arrangement does not bode well for the true independence of the board. Even though the company stated that “…its decision to use Musk’s self-funded D&O insurance program would not ‘impair the independent judgment of the other members of the board’ because it is governed by an agreement that Musk does not have ‘unilateral discretion’ to execute”, “the automaker’s insurance arrangement raises the specter of conflicts of interest between Musk and other board members, whose decisions may directly impact the CEO’s compensation and role within the company.”

Tesla also held its 1st Quarter earnings call this week. On the call, a frustrated Musk, known for his outspoken rants regarding issues he is passionate about, let the world know what he really thought about the shelter-in-place orders that are crippling production of Tesla vehicles in Alameda County, one of six Bay Area counties where shelter-in-place orders have been extended to May 31st. He described the orders as fascist and quipped that the government should “(g)ive people back their (expletive) freedom.” He further explained that :

…the expansion of shelter in place or as frankly (Musk) would call it forcibly imprisoning people in their homes, against all their constitutional rights…and breaking people’s freedoms in that way are horrible and wrong, and not why people came to America or built this country. What the (expletive)….it’s an outrage. It will cause great harm not just to Tesla but to many companies. And while Tesla will weather the storm there are many small companies that will not.

Missing Sports and A YouTube Gem

I watched the first night of the NFL Draft and cried. Yes, cried. Hearing Peyton Manning’s opening and watching the pictures of all of the doctors, nurses and first responders, and the kids and the fans and the full stadiums….too much for me. And then seeing the ESPN Game Day guys and hearing their voices pump up the incredible draft pool. Are you kidding me? They know how to get me. Right in the gut. (Game Day in my house is fourth only to the birth of my three kids, and those guys feel like family to me.)

We’ve missed so much, the end of college basketball season and March Madness, the end of the NBA and Professional Hockey seasons and their playoffs, the Masters…with the colorful azaleas and Amen Corner and Jim Nantz’s voice and the walk to the 18th green. Baseball’s Opening Day. There are rumblings that some baseball may be played in empty stadiums. Beggars can’t be choosers, right?

In my search for a sports fix, I’ve been lucky enough to relive some awesome games that networks have replayed. I went to the University of Virginia, so the replay of the NCAA Basketball’s 2019 Final Four (which was the definition of the thrill of victory coming off of the 2018 stunning agony of defeat) was a welcome distraction.

And then, I found these from a BBC sportscaster who is using his talents during the pandemic:

Sports AND dogs! And creativity. And humanity. I think that is what I love so much about sports in general. The humanity of it all. As with so many other things that I took for granted pre-pandemic, I will never take sports (live or on tv) for granted again. If I have a ticket to a University of Colorado football game at the end of a losing season (it’s hard to lose a class-act SEC coach after one short year and have to “re- re-build” in the middle of a pandemic), I’m going to GO and watch Ralphie the Buffalo run and cheer on the struggling team. I may leave at the beginning of the fourth quarter, but I’m going to go. Just to be there. To feel that rush. To be in the humanity. I can’t wait.


Nathan Vardi, Public Companies Rush to Repay Paycheck Protection program Loans Amid Government Pressure,, April 23, 2020.

Jeff Sistrunk, Elon Must Risks Conflicts in Move to Insure Tesla’s Board, Law360, April 30, 2020.

Lauren Feiner, Elon Musk says orders to stay home are ‘fascist’ in expletive-laced rant during Tesla’s earnings call,, April 29, 2020.

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