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Abu Dhabi, UAEThursday 15 November 2018

Tesla names new chairman to replace Musk 

a run-in with securities regulators cost Elon Musk the position

Tesla CEO Elon Musk speaks at a news conference in Chicago. Tesla has announced that Robyn Denholm of Australia's Telstra will become its new board chair. AP
Tesla CEO Elon Musk speaks at a news conference in Chicago. Tesla has announced that Robyn Denholm of Australia's Telstra will become its new board chair. AP

Tesla appointed Robyn Denholm, a director at the carmaker since 2014, to be chair of the board, after a run-in with securities regulators cost Elon Musk the position he had held since leading the company’s first round of funding 14 years ago.

Ms Denholm, 55, one of two women on the nine-member board, will preside over Tesla’s board effective immediately, the company said in a statement. She will leave her role as chief financial officer and head of strategy at Telstra, the Australian telecommunications company, once her six-month notice period ends.

“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 the statement.

It’s the end of an era for Mr Musk, 47, who became chairman when he led a $7.5 million (Dh27.5m) initial investment in the company in April 2004. While he’ll remain chief executive officer and a director, the fallout from Musk’s posts in which he claimed to have secured the funding and investor support to buy out investors at $420 a share will last for years to come.

Stepping down from the role of chair was a condition of the accord Mr Musk reached with the Securities and Exchange Commission in September to settle fraud charges related to his tweets on taking the company private. In addition to agreeing to a three-year ban from serving as chairman, Musk and Tesla agreed that the company would add two new independent directors to the board by late December.

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Ms Denholm previously worked at Toyota, Sun Microsystems and Juniper Networks, where she was chief financial and operations officer.

“Robyn has extensive experience in both the tech and auto industries, and she has made significant contributions as a Tesla board member over the past four years in helping us become a profitable company,” Mr Musk said in the statement. “I look forward to working even more closely with Robyn as we continue accelerating the advent of sustainable energy.”

The Tesla board is actively continuing to search for two more independent directors.

Tesla’s board, which includes Musk’s brother Kimbal, has long come under fire from corporate governance experts for lacking independence and being comprised of Musk loyalists. Several are investors in or directors at SpaceX, the closely held rocket company that Mr Musk also runs, including Steve Jurvetson. He’s been on a leave of absence since accusations of misconduct spurred his resignation a year ago from the venture capital firm he co-founded.

Directors will create a permanent committee to ensure implementation of the terms of the SEC settlement, which include setting up procedures and controls to oversee Musk’s communications -- including his tweets. Tesla will have to employ or designate a securities lawyer to review messages that senior officers send through Twitter and other social media.

A union-affiliated investor group and officials representing major pension funds in four states have called on Tesla to go beyond the terms of the SEC settlement to fix its corporate governance issues. The group wrote in a letter to three Tesla independent directors last week calling for the creation and release of a plan to refresh the board and for timelines to be set for some members to leave.