New Tesla chair­woman’s big­gest chal­lenge is con­trol­ling Musk

The Trentonian (Trenton, NJ) - - BUSINESS - By Tom Kr­isher

DETROIT >> Aus­tralian telecom­mu­ni­ca­tions ex­ec­u­tive Robyn Den­holm brings much-needed fi­nan­cial and auto in­dus­try ex­per­tise to her new role as Tesla’s board chair­woman, but her big­gest chal­lenge is whether she can rein in a CEO with a pro­cliv­ity for mis­be­hav­ior.

Den­holm, who has been a Tesla board mem­ber for nearly five years, was named to the post late Wed­nes­day, re­plac­ing Elon Musk as part of a se­cu­ri­ties fraud set­tle­ment with U.S. govern­ment reg­u­la­tors.

Cor­po­rate gov­er­nance ex­perts say they would have pre­ferred an out­sider with man­u­fac­tur­ing ex­per­tise be ap­pointed to lead the board, now dom­i­nated by peo­ple with per­sonal and fi­nan­cial ties to Musk, in­clud­ing his brother.

They aren’t sure if Den­holm was hired just to pla­cate the Se­cu­ri­ties and Ex­change Com­mis­sion to com­ply with the set­tle­ment or whether she’ll ac­tu­ally be able to cor­ral the vi­sion­ary but er­ratic Musk, who re­mains CEO.

“With all the crazy stuff go­ing on, she was there,” said Rohan Wil­liamson, a fi­nance pro­fes­sor who stud­ies cor­po­rate gov­er­nance at Ge­orge­town Uni­ver­sity’s McDonough School of Busi­ness. “She couldn’t con­trol him be­fore. Is any­thing go­ing to change?”

Den­holm, 55, is chief fi­nan­cial of­fi­cer and strat­egy head at Tel­stra Corp. Ltd., Aus­tralia’s largest telecom­mu­ni­ca­tions com­pany. Her new role at Tesla came largely be­cause of the board’s fail­ure to con­trol Musk, es­pe­cially when he made a sur­prise an­nounce­ment over Twit­ter in Au­gust that fund­ing was se­cured to take Tesla pri­vate at $420 per share.

That drove up Tesla’s stock price and hurt short-sell­ers, in­vestors who bet against the com­pany’s suc­cess. Even­tu­ally it drew a law­suit from the SEC al­leg­ing that Musk mis­led in­vestors.

Den­holm will step down from Tel­stra after a six­month no­tice pe­riod. Then she’ll work full-time at Tesla, where she has served on the board since 2014. Un­der the SEC set­tle­ment, Musk can’t re­turn as chair­man for three years, and only with a share­holder vote.

The move vaults Den­holm from rel­a­tive ob­scu­rity into a high-pro­file po­si­tion of try­ing to muz­zle Musk and man­age a com­pany that is strug­gling to pro­duce ve­hi­cles and make money.

Charles El­son, di­rec­tor of the cor­po­rate gov­er­nance cen­ter at the Uni­ver­sity of Delaware, said Tesla should have brought in some­one from out­side. No mat­ter how tal­ented Den­holm may be, and even though she ap­pears to have fewer ties to Musk than other di­rec­tors, she has a shadow over her of be­ing on the board that did lit­tle as Musk mis­be­haved. “You re­ally have got to won­der,” he said. “No other CEO of any other pub­lic com­pany would have sur­vived this.”

Mak­ing Den­holm a full­time chair also cre­ates gov­er­nance prob­lems be­cause she could be­come a Tesla ex­ec­u­tive, blur­ring her role as an in­de­pen­dent check on man­age­ment, El­son said.

Email mes­sages sent to Den­holm Thurs­day were not im­me­di­ately re­turned and Tesla de­clined com­ment be­yond its state­ment an­nounc­ing Den­holm as chair.

Den­holm brings fi­nan­cial ex­pe­ri­ence and other pos­i­tives to the ta­ble for Tesla, said Michael Cusumano, a pro­fes­sor at the Mas­sachusetts In­sti­tute of Tech­nol­ogy’s Sloan School of Man­age­ment.

Be­fore Tel­stra, she worked in Sil­i­con Val­ley as chief fi­nan­cial of­fi­cer at Ju­niper Net­works and head of cor­po­rate strate­gic plan­ning at Sun Mi­crosys­tems. She also was na­tional fi­nance man­ager at Toy­ota Mo­tor Corp.’s op­er­a­tions in Aus­tralia, and she’s a mem­ber of the board at Swiss ro­bot­ics and in­dus­trial ma­chin­ery maker ABB.

“She could bring some more fi­nan­cial dis­ci­pline to Tesla,” which has $10 bil­lion in debt and must keep man­u­fac­tur­ing a large num­ber of lower-priced Model 3 sedans to ser­vice its large debt and pay the bills, Cusumano said. Tesla cars also are hav­ing re­li­a­bil­ity prob­lems, he said.

Cusumano fur­ther notes that Den­holm’s track record as a Tesla board mem­ber is not nec­es­sar­ily an in­di­ca­tion of how she’ll be as a chair­woman.

TESLA INC. VIA AP

Elec­tric car and so­lar panel com­pany Tesla’s board has named one of its own, Robyn Den­holm, as chair­man to re­place Elon Musk, shown above right, com­ply­ing with terms of a fraud set­tle­ment with U.S. se­cu­ri­ties reg­u­la­tors.

KIICHIRO SATO — THE AS­SO­CI­ATED PRESS FILE

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