New Tesla chair Robyn Denholm faces governance challenges with Elon Musk
Australian Robyn Denholm faces the tough task of reining in Tesla’s outspoken Elon Musk.
Tesla’s new chairman, Robyn Denholm, faces the task of reining in outspoken founder Elon Musk at a crucial time for the electric car maker.
Ms Denholm, who joined the Tesla board in 2014, assumes the role immediately as the electric car maker attempts to expand beyond its niche player status to challenge industry giants such as Ford and General Motors.
Mr Musk stepped aside as chairman following a Securities and Exchange Commission investigation into disclosures about the possibility of taking the company private. He reached a settlement with the SEC that allowed him to remain chief executive but required him to give up the chairman post for three years.
Management experts, industry analysts and executive recruiters said that Ms Denholm will need to provide a counterweight to Mr Musk and not wilt under the added scrutiny that follows the flamboyant leader.
A Tesla spokeswoman pointed to her “substantial experience working in founder-led companies” as a strength.
Ms Denholm, who will continue in her role as finance chief at Telstra for a six-month notice period, has also held roles that include head of corporate strategic planning at Sun Microsystems and chief financial officer and chief operating officer at Juniper Networks, according to her LinkedIn profile.
As chairman of Tesla, she will have to prove she can provide stronger oversight of company governance than she has demonstrated before her promotion, analysts and experts said.
“The main question she will have to overcome is having been on the board of Tesla...while all of these issues with Elon [Musk] have occurred and there has been little board action or governance taken to rope him in,” said Mickey Matthews, international chairman at Stanton Chase, an executive search firm.
Tesla announced the appointment, ahead of a November 13 deadline imposed by the SEC. The regulator’s September 29 settlement with Mr Musk came after tweets that claimed funding was in place to take the company private at $US420 a share were posted by his Twitter account in early August. The post resulted in an investigation into whether Mr Musk had been truthful about the financing for the deal.
“There should have been a more forceful intervention by the board a long time ago,” said Joseph Osha, a managing director at investment bank JMP Securities.
“I see no reason why this could not have been dealt with before the catastrophe around the buyout that wasn’t a buyout.”
The SEC settlement required Mr Musk and the company to pay $US20 million in fines each. It also obliged Tesla to appoint two new independent board members and to establish a framework to oversee the chief executive’s public comments.
Ms Denholm “needs to make sure that [Mr. Musk] communicates with the market and with shareholders in a way that is appropriate for the CEO of a listed company,” said Mark Freebairn, a partner at Odgers Berndtson, an advisory and recruitment firm.
The independent director appointments also could solidify her position, Mr Matthews said. “Naming truly independent outside directors...can send a message to establish her credibility and strength in the role,” he said.
Ms Denholm’s history working with Mr Musk could help ease the transition, Mr Freebairn said, especially if he struggles to accept the loss of control. “You will be more successful with someone he knows than someone he never met before,” he said.
Time will tell whether the appointment of Ms Denholm amounts to appeasement of the SEC agreement or if it actually serves as a check on Mr Musk’s influence, said James Langston, managing director at executive search firm Diversified Search.
“I’ve met her,” said Peter Chris, chairman at Crist|Kolder Associates. “She has a backbone. She is tough. I think she will be good for Musk.”
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