Tesla taps director Denholm as chair after Musk rows
(Reuters) - Tesla Inc director Robyn Denholm, a telecoms executive who has worked for Toyota, has been promoted to chairwoman of the electric car company and tasked with regulating billionaire Elon Musk’s regime after months of turbulence.
An Australian accountant, Denholm is currently finance chief at telecoms firm Telstra Corp Ltd and replaces Musk after he was forced to relinquish the role as part of a deal to head off charges of fraud by the Securities and Exchange Commission.
The change in structure at the Silicon Valley company, agreed to by Musk in a September court settlement, is supported by many on Wall Street who worry that his record of erratic behavior is undermining the company’s progress.
While she will resign from Telstra to take the role full-time, some analysts expressed concern that she may not be far enough removed from Musk to rein in the billionaire’s public outbursts and bring more order to Tesla.
Denholm, 55, has been an independent director of Tesla since 2014 and the head of its audit committee. She was paid almost $5 million, mainly in stock options, by the company last year, making her the highest remunerated of its board members.
Musk, who remains Tesla's biggest shareholder and the driving force behind its ambitious plans to reshape electric battery technology and car transport, tweeted here his approval of the appointment.
“Musk, I believe has a ton to do with the selection and he wants to be sure that they can see eye-to-eye,” said Elazar Capital analyst Chaim Siegel.
Tesla’s court-approved settlement agreement with the SEC requires the company to appoint an “independent” chairman, although it does not define what it considers to be so.
The regulator declined to say on Thursday if it had approved the appointment of Denholm.
Stephen Diamond, a professor of corporate governance at Santa Clara University, said in general the definition of “independent” is relaxed and that as a result he believed the SEC would not object.
“But it does violate the spirit of the settlement, which was to change the culture of the board so there was a check on Musk’s worst instincts,” he added.
Top proxy advisers Institutional Shareholder Services and Glass, Lewis & Co had each classified Denholm as an “independent” director of Tesla in reports to the carmaker’s investors earlier this year.
Denholm pumped petrol at her parents’ filling station before going on to study at Sydney University and joining accountancy firm Arthur Andersen.
Since then, she has worked at Swiss power grid maker ABB Ltd, network gear firm Juniper Networks and 1980s and 90s computing giant Sun Microsystems.
Telstra CEO, Andy Penn, said when he appointed her: “Robyn has a proven track record as a global COO in a business focused on telecommunications networks.”
“She has overseen business model transformation, supply chain and broader business process re-engineering. She has been a senior executive and director in a range of complex technology environments which make her ideally qualified for the role.”
Executive recruiter Patricia Lenkov, however, said that Denholm likely was not the right pick for the job, arguing Tesla needed a figure with more experience dealing with strong founders.
“There might be an element of risk here. She’s not a proven entity in this kind of work,” she said.
While Tesla is finally starting to make good on Musk’s promises on production of the Model 3 sedan, seen as crucial to the company’s future, it has lost senior executives for sales, human resources, manufacturing and finance in recent months.
Its vice president for manufacturing Gilbert Passin was reported last month to have left.
“We view the fact that Denholm has prior industry experience with Toyota positively,” said CFRA Research analyst Garrett Nelson, adding it made sense that Tesla should seek to avoid the risk of a genuine outsider clashing with Musk.
The Silicon Valley billionaire’s gift for self-promotion has made Tesla one of the world’s most talked-about businesses but also caused public spats with journalists, analysts, Wall Street investors and rapper Azealia Banks.
He is being sued for calling one of the divers behind this year’s Thai cave rescue a “pedo”.
According to The Australian newspaper, Denholm said the only things that really disappoint her are rudeness and waste.
“Politeness costs you absolutely nothing. It doesn’t matter whether you are the most senior person in the room, or the most junior,” she told the paper in an interview a few years ago.
Tesla shares were up 1.4 percent in morning trading.