Tesla Taps Boss to Oversee Musk
November 8, 2018 | The Wall Street Journal
Tesla Inc. named board member Robyn Denholm as its chairman, tasking her with overseeing one of the business world’s most freewheeling figures at a pivotal moment for the electric-vehicle company.
The 55-year-old finance expert’s ascension to the role is doubly unusual: She will need to manage Elon Musk, the iconoclastic chief executive of Tesla who has led the company after becoming its largest investor in 2004. And she is giving up her job as CFO of Australia’s largest telecommunications company to assume the post at Tesla full-time.
The opening for a new chairman was created as part of a settlement reached with securities regulators intended to give Mr. Musk more supervision.
Those who have worked with Ms. Denholm at Telstra Corp., say she is levelheaded and direct.
Scott McNealy, co-founder and former CEO of Sun Microsystems, where Ms. Denholm worked in increasingly senior roles from 1996 to 2007, said she could be a good complement to Mr. Musk—if he lets her.
“Elon wants the camera, he wants the microphone—Robyn doesn’t care about that,” Mr. McNealy said in an interview. “She’s more COO-ish than she is flamboyant CEO. She’s all about making sure the trains run on time, that the money is being spent properly, that all of the stakeholders are properly listened to.”
Many details about Ms. Denholm’s role remain unclear, including what she will do between board meetings. Wednesday’s announcement said she was taking over as chairman immediately, but would continue her role at Telstra for six months. Tesla said Mr. Musk, to ensure a smooth transition during that time, would “be a resource to Robyn and provide any support that she requests.”
Tesla said it isn’t yet clear whether Ms. Denholm will move from Australia to Silicon Valley—where Tesla is based and where she spent nearly two decades working—after she departs Telstra. Ms. Denholm will get a $300,000 annual cash retainer and 8,000 stock options each year, Tesla said.
Overseeing Mr. Musk would be a monumental task for even the most assertive chairman. The CEO, who has also held the title of chief product architect, has run Tesla almost as an extension of himself, spearheading parts of the business as varied as strategy, marketing and engineering while immersing himself in the smallest of production details. He is famous for mouthing off on Twitter at all hours of the day and night, and in September appeared to smoke marijuana during an online interview with a comedian.
The settlement with the U.S. Securities and Exchange Commission that led to Ms. Denholm’s appointment arose from Mr. Musk’s Aug. 7 tweets raising the idea of taking Tesla private and saying he had secured funding for a deal at $420 a share. Shares initially soared with the unexpected news, only to later plummet as it became clear over ensuing days that Mr. Musk didn’t have a completed plan.
The SEC alleged that Mr. Musk didn’t have funding locked down and accused him of picking that price—a reference to marijuana—to impress his girlfriend.
The Sept. 29 settlement with the SEC, in which Mr. Musk neither admitted nor denied wrongdoing, required Mr. Musk to step down as chairman for three years, starting no later than Nov. 13, but let him remain as Tesla CEO and board member. Mr. Musk and Tesla each had to pay $20 million in fines, and Tesla was required to add two new independent board members and establish a system to oversee Mr. Musk’s public statements. Tesla has until the end of December to meet those requirements.
Enthusiasm for Mr. Musk’s vision of the future, including electric cars that drive themselves, has helped push Tesla’s market value to rival General Motors Co. , even though Tesla has never turned an annual profit and sells a fraction of the cars. Tesla’s growth has been, in large part, fueled by its continued access to capital—either through issuing new shares or taking on new debt.
As a Tesla board member, Ms. Denholm has provided some rare automotive experience to a company that prides itself on being an industry outsider. She spent seven years at Toyota Motor Corp. in Australia, where she was a senior financial manager, before working at Sun and then joining Juniper Networks Inc. in 2007. She left there as chief financial and operations officer in 2016, and in 2017 joined Telstra, the Australian telecom company.
“This is not somebody who’s going to sit at the back and not share a point of view,” said David Meline, CFO at U.S. drugmaker Amgen Inc., who served with Ms. Denholm on the board of the Swiss engineering company ABB Ltd. “She is “somebody who’s certainly going to make their point understood.”
It is rare for someone to give up a full-time role as a top executive at one company to head the board of another, corporate governance specialists say.
“It’s an opportunity to really redefine what it means to be a board chair and the governing dynamic with a CEO as entrepreneurial and mercurial as Elon,” said Jeffrey Cohn, global managing partner at DHR International, an executive-search firm. “And it’s possible she knows she can’t get it right without being a full-time chair.”
Ms. Denholm has served on Tesla’s board for four years but has fewer ties to Mr. Musk than most fellow directors. Tesla’s board has come under criticism from some investors and advocates for a perceived lack of independence because most of the directors have close business or personal relationships with Mr. Musk.
Some investors cheered Ms. Denholm’s appointment. Tesla shares edged up 0.93% to $351.40, more than 40% above their lowest point this year and approaching the $387.46 level after Mr. Musk’s tweet about going private.
“Of the current directors, she is a good choice,” said Dieter Waizenegger, executive director of CtW Investment Group, which represents union-sponsored pension funds that own Tesla shares and which has criticized Tesla’s governance. Proof of her “independent leadership will be whether she can transform the board into a functional entity that can guide the CEO,” he said in an email.
Gabe Hoffman, a fund manager who has a bearish bet on Tesla stock, said Ms. Denholm is a poor choice because she is a current board member rather than a new appointee and because she is the only board member “who is geographically located 1/2 way around the world, with a massive time zone difference.”