Australian Robyn Denholm will succeed Elon Musk as Tesla's chairman, though he remains CEO.
Australian Robyn Denholm is Tesla’s new chairman, replacing Elon Musk as head of the board of directors following a settlement with the Securities and Exchange Commission that forced the South African-born exec to relinquish his role.
Musk, who will remain chief executive officer of the battery-carmaker, can attempt to regain the chairman’s post, as well, after a three-year hiatus mandated by the SEC settlement. The agreement was reached after the government accused the 47-year-old of lying to investors when, last August, he declared that he had arranged funding to take Tesla private.
The move will position Denholm as one of the highest-ranking female executives in the auto industry, with General Motors’ Mary Barra the only other woman serving as chairman of a major car manufacturer. Denholm had already been serving as an independent director on the Tesla board since 2014. There is one other woman on the board.
The 55-year-old Denholm will relinquish her current, full-time position at the Australian telecomm company Telstra Corp., where she currently serves as chief financial officer. Her appointment as Tesla chairman is effective immediately.
(Musk settles: Pays SEC $20 million, resigns as chairman. Click Here for the story.)
“Would like to thank Robyn for joining the team. Great respect. Very much look forward to working together,” Musk said in a tweet early Thursday.
Tesla CEO Elon Musk expressed enthusiasm for Denholm joining Tesla as his replacement as chairman.
Denholm’s appointment comes less than a week before the Nov. 13 deadline the SEC had set for Tesla to find a replacement for Musk, and comes a month after initial, accurate reports that Tesla would turn to another board member, Twenty-First Century Fox’s CEO James Murdoch to be its board chief. Many observers criticized that possibility, concerned that Murdoch was too close to Musk, and that he had no prior automotive experience.
“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,” Denholm said following the Thursday morning announcement.
(Click Here for more about Tesla being hit with three subpoenas by SEC.)
She will have to help oversee key decisions at Tesla at a critical juncture for the company. It recently posted a rare profit as production and sales of the compact Model 3 battery-electric sedan have begun ramping up. But Tesla still faces some serious challenges.
- It has to repeat itself and stay in the black to deliver the second-half profit that Musk had promised, while also delivering positive cash flow;
- Denholm must also live within the financial constraints set by Musk who has said Tesla won’t need additional capital to move forward on its ambitious product program, as well as its plan to build new plants, including one for which ground was recently broken outside Shanghai;
- Perhaps her biggest challenge will be pressing Musk to tone down what has been widely described as his erratic behavior in recent months.
The fact that Tesla’s CEO had to relinquish the chairman’s post underscores that concern. Musk has been widely criticized for a variety of his actions since last spring when he derided several industry analysts during a first-quarter earnings call. He subsequently got into a flame war with a British diver who helped rescue a group of Thai teens trapped in a flooded cave and now faces a defamation lawsuit. Musk tossed fuel on the fire when he lit up a joint while appearing on comedian Joe Rogan’s podcast.
But the biggest problem followed his August tweet in which he announced a plan to take Tesla private, declaring “Funding secured.” It turned out the 47-year-old entrepreneur had only had the most preliminary discussions with officials from a Saudi Arabian sovereign investment fund.
The plan quickly collapsed and the SEC sued Musk, something that could have seen him banned from holding a management position in a public company for life. The settlement required Musk to step down as chairman and pay a $20 million fine – which critics said was barely more than a speeding ticket for someone of his wealth.
(To see more about Tesla meeting its Q3 production goal, Click Here.)
In her new post, Denholm will receive an annual payment of $300,000, as well as 8,000 stock options annually. Tesla shares closed Wednesday at $348.16, up 0.28% for the day. That would make the options worth $2.78 million. The stock rose sharply after the first privatization tweet, but then tumbled. Since the announcement of a third-quarter profit it has rebounded and is now up 12% for the year.