Usually when a CFO steps down, it’s not exactly front-page news. But this isn’t just any CFO, and it isn’t just any company. On Monday morning, news broke that Tesla’s longtime CFO, Zachary Kirkhorn would be leaving his role. Speculation immediately started to swirl around why Kirkhorn was leaving, and why now. In a regulatory filing Monday Tesla also announced the appointment of Vaibhav Taneja as CFO, in addition to his current role as chief accounting officer. The company said in the filing that during Kirkhorn’s tenure, “Tesla has seen tremendous expansion and growth” and that he will remain at the company through the end of the year to support the transition.
“It’s a blow in the near term as Zach was a key part of this historic Tesla turnaround the last five years,” Dan Ives, a tech analyst at Wedbush Securities, told Fortune. “That said, Tesla has a strong bench now.” But make no mistake, added Ives, “this is a big surprise to the Street.”
Here are three of the theories circulating that might explain Kirkhorn’s exit.
The heavy lifting at Tesla has been done
This would be the most positive spin on Kirkhorn’s move. He joined Tesla in March 2010 as a senior analyst in finance. When he took the CFO job in 2019, Tesla was valued at $50 billion, and today, it’s worth $773 billion, Fortune reported. Before he became CFO, Tesla had a long history of losses and occasionally burned more than $1 billion of cash per quarter. With Kirkhorn as finance chief, Tesla has experienced profitability and repaid about $10 billion of debt in the past three years, which has helped secure investment-grade ratings.
As Ives put it, “The heavy lifting at Tesla has been done.”
An adjacent theory is that Kirkhorn, who the Wall Street Journal reported was a successor candidate to Musk, got the message that the boss didn’t have plans to move on anytime soon, in which case he could have been stuck as a CEO-in-waiting indefinitely.
Elon doesn’t do lengthy goodbyes
Gary Black, managing partner of the Future Fund, had some interesting points about the timing and wording of the announcement, which he posted in a thread on X (the company formerly known as Twitter).
“My read on Zach’s resignation: $TSLA has made him very wealthy and Zach likely told Elon it was time for him to move on and suggested he leave at year-end. Elon likely asked him to reconsider, Zach reconsidered and told him he still wanted to leave, Elon took it badly and said let’s make it effective immediately,” Black theorized.
There’s no question that from a financial perspective, Tesla has made Kirkhorn extremely wealthy. Upon taking on the role of CFO in March 2019, Kirkhorn received a stock option grant of $12 million and a restricted stock unit grant of $4 million, which would be granted and will vest over four years in accordance with Tesla’s standard equity policies.
His salary for 2019 was $276,058, and his total compensation, including awards, was $21,243,957. The following year, in 2020, Kirkhorn’s salary was $269,663, and his total compensation was at $46,562,116. And in 2022, his salary was $300,000 with total compensation of $303,000, according to Tesla’s 2023 proxy statement.
Kirkhorn and Musk had some sort of fundamental disagreement
A third theory is that Kirkhorn and the famously colorful Musk had some sort of disagreement.
“The oddest aspect of Zach’s resignation is the timing—effective immediately,” Black wrote on X. “Most amicable resignations where a top exec has been at a firm for 10 or more years have a transition period (one to two quarters) where the person steps down at the end of the transition.
He continues, “Nowhere in the 8-K or Zach’s LinkedIn post does it say Zach resigned. That opens the door to the question: Was Zach fired, or did he disagree with Elon on some aspect of strategy (price cuts/margins) or succession (maybe Zach was told he was not a CEO contender)? Either way, the market’s knee-jerk reaction to CFO departures is that they are normally associated with bad news. Since nothing about $TSLA is ‘normal,’ I would not jump to that conclusion.”
Kirkhorn did post on LinkedIn, where he said that he stepped down, and named his successor. “Being a part of this company is a special experience, and I’m extremely proud of the work we’ve done together since I joined over 13 years ago,” he wrote. “As I shift my responsibilities to support this transition, I want to thank the talented, passionate, and hardworking employees at Tesla, who have accomplished things many thought not possible. I also want to thank Elon for his leadership and optimism, which has inspired so many people.”
Tesla shares fell almost 3% Monday morning on the news. But Ives thinks this isn’t the last we’ll see of Kirkhorn: He’ll be “a CEO somewhere else in 2024,” he predicted.
