Tesla announced today that Oracle co-founder and Chairman Larry Ellison, and an investor in Tesla, has been added to the Tesla board. Also joining the board is Kathleen Wilson-Thompson, global head of HR at Walgreens.
The move fulfills the letter, although not the spirit, of Tesla's agreement with the Securities and Exchange Commission, which sued the company after Elon Musk posted an inaccurate and ill-advised tweet saying he was planning to take Tesla private and had the funding to do so. The settlement required that Tesla name a new chair to replace Musk, and add two independent directors to the board.
The company has now met both those conditions, though maybe not the way the SEC wished. Robyn Denholm, Tesla's new chair, lives in Australia, where she's CFO of that country's largest telecom company. She won't move to California for at least another four months and maybe never. That might make it tough for her to oversee Musk, as the SEC wanted the new chair to do. She's also a longtime member of Tesla's board, which is famous for failing to oversee him, at least so far.
Ellison is certainly more local and more vocal. He has a lot in common with Musk--he's another iconic entrepreneur who built a hugely successful enterprise but sometimes gets himself in trouble by publicly saying exactly what he's thinking, for instance when he called cloud computing "complete gibberish" at a 2008 analyst conference. Perhaps most important from Musk's point of view, he's a good friend and a staunch defender of both Tesla and Musk.
Case in point, an October analyst call, where Ellison momentarily diverged from the topic at hand to defend Musk. "He's landing rockets on robot drone rafts in the ocean," Ellison said. "And you're saying he doesn't know what he's doing. Well, who else is landing rockets? You ever land a rocket on a robot drone? Who are you?"
Ellison may not be the truly independent voice the SEC was hoping for. And yet, his arrival is probably very good news for Tesla. Ellison is one of the world's richest people precisely because he knows how to build a profitable company. He also has a proven track record as an outside director, particularly at Apple, where he helped guide that company's legendary turnaround after Steve Jobs returned as CEO in 1997. He has skin in the game, having bought 3 million shares of Tesla earlier this year. And, while he's obviously a big fan of Elon Musk, he's clearly capable of standing up to him if Ellison believes Musk is headed in the wrong direction.
Tesla's other new director, Kathleen Wilson-Thompson, is more in the mold of Denholm--an un-flamboyant executive who has spent decades working her way up the corporate ladder, first at Kellogg, then at Walgreens. Having a longtime HR executive on the board is another good move for the company, in light of complaints about working conditions, especially during the Model 3 production ramp-up.
The SEC has not publicly commented on the choice of new directors. But the markets seem to approve. Tesla's share price is up by more than 5 percent on a day when most of the market headed downward.
Disclosure: I'm a contributor to Oracle's magazine Profit.