Tesla’s new chairman faces tough time reining in Musk

Robyn Denholm was already part of the board as an independent director

Tesla Inc chose Robyn Denholm to succeed Elon Musk as board chair, selecting an independent director to contend with the carmaker’s mercurial CEO following his run-ins with regulators and investors.

Denholm is one of two women on Tesla’s nine-member board.

She will assume the chairman’s role immediately. A director since 2014, she will leave her position as chief financial officer and head of strategy at Australian phone company Telstra Corp. at the end of her sixmonth notice period.

The appointment marks the end of an era for Musk, who became chairman when he led a $7.5 million (Dh27.54 million) initial investment in Tesla in April 2004. While Musk will remain CEO and a board director, the fallout from his Twitter posts — which started with a claim that he secured funding and support to buy out investors at $420 a share — will last for years to come. “Robyn has extensive experience in both the tech and auto industries, and she has made significant contributions as a Tesla board member over the past four years in helping us become a profitable company,” Musk said in the statement. “I look forward to working even more closely with Robyn as we continue accelerating the advent of sustainable energy.” In typical style, he followed the official comment up with a tweet.

Troublesome tweets

Ceding the role of chairman was a condition of the accord Musk reached with the US Securities and Exchange Commission (SEC) in September to settle fraud charges related to his tweets on taking the company private. In addition to agreeing to a three-year ban from serving in the job, Musk and Tesla agreed that the company would add two new independent directors to the board by late December. The Tesla board is actively continuing the search to fill those posts. Denholm said she plans to devote herself full time to Tesla when her obligations to the Melbourne-based telecommunications company are complete. She won’t take on another job.

“While Denholm is technically an independent member of the board, she has been part of the Musk team for some time now and that suggests she will not be up to the task of checking Musk’s worst instincts,” said Stephen Diamond, a professor of law at Santa Clara University who specialises in corporate governance. “And, of course, that was the whole point of the SEC settlement.”

Tesla’s board, which includes Musk’s brother Kimbal, has long come under fire from corporate governance experts for lacking independence and comprising Musk loyalists.

The new chairman isn’t likely to influence Musk’s behaviour, said Frank Schwope, an analyst with NordLB. “She’s from Musk’s inner circle and is unlikely to put obstacles in the way of decisions,” Schwope said. “This exercise, brought on by the SEC deal, was to teach Musk a lesson and this is an easy way to fulfil the requirement.”