Under regulatory pressure, Tesla has named a new leader for its board as it tries to allay concerns about its stability under Elon Musk, its colorful but erratic co-founder.
The electric-car company said Wednesday night that Robyn Denholm, a board member since 2014 and a longtime technology and telecommunications executive, would become its chairman immediately. Musk will remain Tesla's chief executive. Denholm is currently the chief financial officer of Telstra, which dominates telecommunications in Australia.
The move to replace Musk as chairman was part of a settlement reached with the Securities and Exchange Commission in September to deal with the fallout from his Twitter post in August that he had secured funding for a private buyout of the company. That claim quickly fell into doubt. (Musk later explained in a blog post that discussions with Saudi Arabia's sovereign wealth fund led him to believe that it had both money and enthusiasm for such a deal.)
Under that settlement, Tesla agreed to add two independent directors to its board and to name a new chairman, splitting those responsibilities from Musk's post as chief executive, by next Tuesday. The company was also required to set up a permanent committee to monitor Musk's public declarations, including his Twitter posts.
Erik Gordon, a professor at the University of Michigan's Ross School of Business, said the appointment of Denholm "technically complies" with the SEC settlement, but questioned how much Denholm would be able to push back against a forceful personality like Musk.
"If the goal is to provide adult supervision, it won't accomplish that," Gordon said. "She's been on the board through all of the shenanigans. She never resigned in protest. She is a Musk supporter. If it doesn't work out, she will be the one who leaves. It won't be Musk who leaves."
David Whiston, an analyst at Morningstar who follows Tesla, said the appointment was "a good balance" and was probably best for Tesla's stock price. Bringing in a hard-nosed outsider "who wouldn't put up with Elon's Twitter nonsense," he added, "would clash with Elon and it wouldn't work at all."
Tesla shares closed up about 1 percent in trading Thursday.
Still, Whiston also expressed doubts about how much Denholm will be able to rein in Musk. In the last few weeks, the chief executive referred to the SEC on Twitter as the "Shortseller Enrichment Commission," and then announced that he no longer had a title at Tesla, raising questions about whether he would continue to have the final word, even with a new leader of the board.
"It's troubling to me that since the settlement Elon has already made a mockery of the SEC twice," Whiston said. He said Musk should "stop playing games and just make the darn cars."
Tesla's new chairman has an extensive background in technology. Before her current position at Telstra, Denholm was an executive at Juniper Networks, which makes computer networking equipment, for about a decade.
She also has experience in the auto industry. She spent seven years at Toyota Motor Corp. Australia, where she was national manager for finance, before leaving in 1996 for Sun Microsystems, a onetime Silicon Valley powerhouse later acquired by Oracle.
Tesla said Denholm would step down from her role at Telstra once her six-month notice period is complete.
Whiston said Denholm's plan to leave Telstra "shows commitment to Tesla to make sure this oversight is done properly." But Gordon cautioned that once she left her Telstra position, being chairman of Tesla "will be her full-time gig," making her less likely to confront Musk. "It will be a job she doesn't want to lose," he said.
Musk heralded the change in typical fashion -- on Twitter.
In the Tesla announcement, Musk cited Denholm's experience and years with his company. "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. I look forward to working even more closely with Robyn as we continue accelerating the advent of sustainable energy."
Musk has galvanized investors and the public imagination with his sleek electric cars and his big dreams for space travel and other ambitions. But his public declarations increasingly unnerved Tesla shareholders and the board of directors who represent them. Production problems at Tesla only added to those concerns.
In addition to his troublesome tweet about a buyout, Musk showed other signs of stress. He had a nasty social media battle with a British diver involved in the daring rescue of 12 boys in a flooded cave in Thailand this summer -- a spat he had to quickly walk back.
In August, Musk told The New York Times that this year "has been the most difficult and painful year of my career," in part because of the pressure of running Tesla, and that he sometimes took the insomnia drug Ambien to sleep. Some board members worried the drug was contributing to his late-night Twitter sessions.
In September, he appeared to briefly smoke marijuana during an interview with Joe Rogan, a comedian. (The interview took place in California, where recreational marijuana use is legal.)
The SEC settlement was intended to lay some of those concerns to rest. Last month, Tesla posted positive financial results, suggesting it is beginning to resolve some of its problems.
Business on 11/09/2018