November 9, 2018

Breakingviews: New Tesla chair will have to get tougher

by Breakingviews.

Elon Musk is finally getting his adult supervision. Robyn Denholm, finance chief at Australian telecom operator Telstra, will move from her boardroom seat at Tesla to the head of the table – and oversee the $60 billion electric-car maker’s erratic chief executive full-time. She will have to get tougher, though.

Having an independent chair is a plus, even if it was forced on Musk by the U.S. Securities and Exchange Commission. A regulatory settlement followed his excessively confident public statements about a potential deal to take Tesla private. The company has plenty on its plate, from the hands-on task of ramping up vehicle production to keeping investors sweet and dealing with the continuing fallout from Musk’s overcooked remarks.

Denholm has the kind of record that ought to help, at least once she has fully extracted herself from Telstra in six months. Her professional background includes roles involving autos at Toyota and technology at Juniper Networks. Her experience also encompasses operational matters and finance, both important at Tesla.

That said, Denholm doesn’t step into the job with a clean sheet. Since 2014, she has been among the directors who allowed Musk far too much leeway. She chaired the company’s audit committee and was involved in Tesla’s bizarre $2.6 billion acquisition of SolarCity, another pet Musk project, whose activities have since dwindled. She even has the dubious honour of being named in at least one investor lawsuit.

Chairing the Tesla board full-time solves Denholm’s globe-trotting commute. Moreover, last year she collected eyebrow-raising remuneration of nearly $5 million from the automaker, more than three times the roughly $1.5 million she was paid in the year to June for her full-time job Down Under. That may help explain why she is going all-in on Musk just a month after taking the CFO job at Telstra.

Musk says he is looking forward to working with his new boss. A chair and a CEO should ideally be in sync. But to provide the checks and balances the SEC and investors clearly want, Denholm is also going to have stand up to Musk more often than the board on which she sat has done thus far.

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