Tesla has appointed a new chair to replace Elon Musk, effective immediately, just five days ahead of the November 13 deadline required by the Securities and Exchange Commission. The new chair, Robyn Denholm, has served on the Tesla board since 2014 and is currently CFO of Telstra, Australia's largest telecom company.
Yes, that means she lives in Australia, and will continue to live there for at least the next six months as she serves out her six months' notice with her current employer. When that time is up, she plans to leave Telstra and take on being Tesla's chair as a full-time position. However, according to the company, she may or may not relocate to the United States.
Although Elon Musk will remain CEO of Tesla, his departure as chair for at least the next three years was part of a settlement deal reached with the SEC after the agency investigated an especially unfortunate tweet in which Musk said he was thinking of taking Tesla private and had funding already secured. That statement turned out to be false, and thus in violation of SEC rules. Under the settlement, Musk and Tesla must each pay a $20 million fine. The board must also add two new independent members, and set up a committee to oversee Musk's public statements as well as his tweets. It still has a few more weeks to fulfill those conditions.
Besides serving as an outside director on Tesla's board, Denholm has seven years' experience as national manager of finance at Toyota's Australian subsidiary. She then held positions at Sun Microsystems (later acquired by Oracle) and Juniper Networks before joining Telstra. At Tesla, she will receive a $300,000 retainer every year along with 8,000 stock options.
Unlike Musk, Denholm has never sought the limelight. "She's all about making sure the trains run on time, that the money is being spent properly, that all of the stakeholders are properly listened to," Sun co-founder Scott McNealy told The Wall Street Journal. Tesla could certainly use some help in all these areas.
On the other hand, critics point out that she's been on the board for half Tesla's life as a public company--a board on which several members are Musk's family and friends, and that has supported some of the company's more controversial moves, such as the acquisition of struggling solar company SolarCity and Musk's $2.6 billion 10-year compensation package.
Some say that it would have been a better choice to bring in a chair from outside Tesla's current board, someone more likely to question his decisions and assert some authority over him. That would seem to be what the SEC had in mind with this requirement. But other Tesla observers argue that a strong-willed chair who locked horns with Musk would only cause havoc at the company. Musk's reputation and creativity is perhaps Tesla's biggest asset. The company needs him, and not just because he sleeps on the factory floor so he can fix malfunctioning robots. His departure would tank Tesla's share price and make it harder for the company to borrow or raise funds, as it will likely need to do at some point. It could even affect car sales, since many Tesla drivers seem to feel a personal affinity with Musk. That would be a real shame, just when Tesla has finally turned profitable and is finally meeting its Model 3 production goals.
Elon Musk fans on Twitter have likened Denholm to Gwynne Shotwell, president and COO of SpaceX, where Musk is also CEO. Shotwell has been widely praised for running that company smoothly and without drama, providing the sort of consistency and stability that Musk seems to lack. Of course, at SpaceX, Musk is the boss and Shotwell reports to him, whereas at Tesla, Musk is supposed to report to Denholm, at least in theory. Whether that will be a reality--especially while she stays in Australia--is not at all clear.