DETROIT – Australian telecommunications government Robyn Denholm brings much-needed monetary and auto business experience to her new function as Tesla’s board chairwoman. However her greatest problem is whether or not she will rein in a CEO with a proclivity for misbehavior.
Denholm, who has been a Tesla board member for almost 5 years, was named to the publish late Wednesday, changing Elon Musk as a part of a securities fraud settlement with U.S. authorities regulators.
Company governance specialists say they’d have most well-liked an outsider with manufacturing experience be appointed to steer the board, now dominated by individuals with private and monetary ties to Musk, together with his brother.
They don’t seem to be certain if Denholm was employed simply to placate the Securities and Change Fee to adjust to the settlement or whether or not she’ll really have the ability to corral the visionary however erratic Musk, who stays CEO.
Musk’s Twitter shock
“With all of the loopy stuff occurring, she was there,” stated Rohan Williamson, a finance professor who research company governance at Georgetown College’s McDonough College of Enterprise. “She could not management him earlier than. Is something going to vary?”
Denholm, 55, is chief monetary officer and technique head at Telstra Corp., Australia’s largest telecommunications firm. Her new function at Tesla got here largely due to the board’s failure to manage Musk, particularly when he made a shock announcement over Twitter in August that funding was secured to take Tesla non-public at $420 per share.
That drove up Tesla’s inventory value and harm short-sellers (buyers who guess in opposition to the corporate’s success). Finally it drew a lawsuit from the SEC alleging that Musk misled buyers.
Denholm will step down from Telstra after a six-month discover interval. Then she’ll work full-time at Tesla, the place she has served on the board since 2014. Beneath the SEC settlement, Musk cannot return as chairman for 3 years and solely with a shareholder vote.
The transfer vaults Denholm from relative obscurity right into a high-profile place of attempting to muzzle Musk and handle an organization that’s struggling to supply automobiles and generate profits.
Charles Elson, director of the company governance middle on the College of Delaware, stated Tesla ought to have introduced in somebody from exterior. Irrespective of how gifted Denholm could also be, and despite the fact that she seems to have fewer ties to Musk than different administrators, she has a shadow over her of being on the board that did little as Musk misbehaved.
“You actually have gotten to marvel,” he stated. “No different CEO of some other public firm would have survived this.”
Making Denholm a full-time chair additionally creates governance issues as a result of she may turn into a Tesla government, blurring her function as an unbiased test on administration, Elson stated.
Electronic mail messages despatched to Denholm Thursday weren’t instantly returned, and Tesla declined remark past its assertion saying Denholm as chair.
From Silicon Valley to Toyota
Denholm brings monetary expertise and different positives to the desk for Tesla, stated Michael Cusumano, a professor on the Massachusetts Institute of Expertise’s Sloan College of Administration.
Earlier than Telstra, she labored in Silicon Valley as chief monetary officer at Juniper Networks and head of company strategic planning at Solar Microsystems. She additionally was nationwide finance supervisor at Toyota’s operations in Australia, and she or he’s a member of the board at Swiss robotics and industrial equipment maker ABB.
“She may deliver some extra monetary self-discipline to Tesla,” which has $10 billion in debt and should hold manufacturing numerous lower-price Mannequin three sedans to service its massive debt and pay the payments, Cusumano stated. Tesla automobiles are also having reliability issues, he stated.
Cusumano additional famous that Denholm’s monitor file as a Tesla board member isn’t essentially a sign of how she’ll be as a chairwoman.
“She’s had a ringside seat to the chaos, and she or he did not or was not ready to vary something,” stated Cusumano, who has served on company boards. “All the data you’re given comes from the CEO, COO, CFO,” he stated. “It truly is a restricted place. So I do not suppose we will say that, properly, she was ineffective as a director, the entire board was ineffective, so she’s prone to be ineffective as chairwoman.”
A rarity for Tesla: Earnings
On Twitter Thursday morning, Musk wrote that he has nice respect for Denholm. “Very a lot sit up for working collectively,” he wrote.
In an announcement, Denholm stated she believes in Tesla and appears ahead to serving to Musk and the corporate “obtain sustainable profitability and drive long-term shareholder worth.”
Tesla earned a $311.5 million internet revenue throughout the third-quarter. It was solely the third time that Tesla has posted a quarterly revenue in its eight-year historical past as a public firm and the primary time in two years. Telsa has by no means reported an annual revenue.
Beneath the settlement with the SEC, Tesla is also required to nominate two new unbiased administrators, and it should evaluation Musk’s posts in regards to the firm on Twitter. Musk and Tesla every needed to pay a $20 million penalty below the September cope with the SEC, and he can not return as chairman for 3 years.
However controlling Musk will likely be an enormous job for Denholm. Even after the settlement was introduced, Musk taunted the SEC, calling it the “Shortseller Enrichment Fee” earlier than snidely praising it for “doing unbelievable work.”