Tesla names new board chair in fraud settlement
Denholm in, Musk still chief executive
DETROIT | Tesla’s board has named one of its own as chairman to replace Elon Musk, complying with terms of a fraud settlement with U.S. securities regulators.
The electric car and solar panel company’s board on Thursday named Australian telecommunications executive Robyn Denholm as chairman, effective immediately.
Ms. Denholm will step down as chief financial officer and strategy head at Telstra, Australia’s largest telecommunications company, after a six-month notice period. She will work full-time at Tesla, where she has served on the board since 2014.
Mr. Musk will remain as Tesla’s chief executive as part of the settlement deal with the U.S. Securities and Exchange Commission. The U.S. agency filed a lawsuit alleging that Mr. Musk duped investors in August with misleading statements on Twitter about securing the funding to take Tesla private.
The move vaults Ms. Denholm, 55, from relative obscurity into a high-profile position of trying to rein in Mr. Musk and manage a company that is struggling to produce vehicles and make money as it attempts to shift the world from fueling transportation with oil to batterypowered electric vehicles.
“I believe in this company. I believe in its mission and I look forward to helping Elon and the Tesla team achieve sustainable profitability and drive long-term shareholder value,” Ms. Denholm said in a statement.
Critics of Tesla’s board have said members lack independence and are too closely allied with Mr. Musk, many through financial deals. Mr. Musk’s brother, Kimbal, is one of the members.
Although Ms. Denholm appears to have fewer ties to Mr. Musk than other directors, she still was on the board through numerous cases of bizarre behavior by Mr. Musk, including his surprise tweet to take Tesla private, smoking what looked like marijuana during a YouTube interview, and labeling a British diver a pedophile in a dispute over the rescue of Thai youth soccer players who were trapped in a cave.
A corporate governance expert questioned whether Ms. Denholm is the right person for the job, given that she was a member of Tesla’s board for four years yet failed to rein in the visionary yet erratic Mr. Musk.
“She was there while all of this was going on,” said Charles Elson, director of the corporate governance center at the University of Delaware. “Do you ask the person who helped get you lost in the woods to help drive you out of the woods?”
Mr. Elson said the company should have brought in someone from outside to be chairman, and that no matter how talented Ms. Denholm may be, she has a shadow over her of being on the board that did little as Mr. Musk misbehaved.
“You really have got to wonder,” he said. “No other CEO of any other public company would have survived this.”
Making Ms. Denholm a full-time chair also creates governance problems because she could become a Tesla executive, blurring her role as an independent check on management, Mr. Elson said.
Email messages sent to Ms. Denholm Thursday were not immediately returned.
There was little reaction to the appointment from the markets Thursday. Tesla shares rose slightly to $349.34 in premarket trading.
Under the settlement, Tesla also is required to appoint two new independent directors, and it must review the sometimes-erratic Mr. Musk’s posts about the company on Twitter. Mr. Musk and Tesla each had to pay a $20 million penalty under the September deal with the SEC, and he cannot return as chairman for three years.