Why the nomination of Robyn Denholm as president is a problem for Tesla



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This is not a commentary on Denholm's career. She has extensive experience in companies such as Telstra, where she was recently appointed chief of finance and strategy, and at Juniper Networks where she was chief of finance and operations. She is leaving Telstra to focus on her new position, awaiting a six-month notice period.

Illustration: John Shakespeare

Illustration: John ShakespeareCredit:

The question, as Musk's tweet unwittingly pointed out, is that Denholm was on Tesla's board for almost half of his life as a public company. This is problematic for two reasons.

The first is that it represents a missed opportunity. Recall that Musk must step down from his seat in front of the table to get a hold of the Securities and Exchange Commission, which accused him of fooling shareholders with their semi-reseller tweets in August.

The overall purpose of this agreement was to fix the lack of effective governance and oversight of the exemplary bizarre episode. In addition to separating the roles of CEO and CEO for at least three years, Tesla agreed, among other things, to appoint two new independent directors and institute better controls on the company's external communications, including that of Musk.

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This gave Tesla the chance to name someone from outside the company, preferably someone with extensive experience in automobile manufacturing, and definitely someone who had not worked with Musk before. According to Tesla's proxy statement, Denholm has some previous experience in Toyota's financial positions, but the real issue is that Tesla opted for an insider when an outsider would have signaled a real change.

The second problem is that, as an insider, Denholm was already supposedly providing independent supervision during some of the most disturbing periods in Tesla's history; precisely those periods when supervision seemed – how to put it? – intensely subtle from an external perspective.

She was, of course, part of the special committee assembled and then dismantled during that whirlwind of 17 days to take home whatever it was.

Denholm was also on the board that failed to contain Musk's increasingly bizarre Twitter habits – which in retrospect seems like a prelude to the now infamous August 7 "bailout" missive.

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As part of the clearing committee, she also played a role in establishing Musk's gigantic payment package earlier this year, which was approved by shareholders after two large prosecutors' advice firms turned negative. On that front, having received a total compensation of nearly $ 5 million in 2017 (virtually all in stock options), Denholm was the highest paid member of a board whose pay is well above its peers in similar firms and is at odds with its apparent utility.

Denholm was also a member of the board that approved Tesla's acquisition of SolarCity in 2016. This deal, which nearly doubled Tesla's debt, was quoted by a consultancy as a "veiled redemption plan" for a troubled company. where Musk was a major shareholder and chairman, and the CEO was his cousin.

I remembered this in the last quarterly record of Tesla in the SEC. This revealed that in August Tesla rescued Musk and former chief technology officer of SolarCity – another cousin – with $ 82.5 million in promissory notes that were actually old "Solar Bonds" they had purchased from SolarCity soon after the acquisition be announced.

None of this means that Denholm can not somehow take a stronger position as president and inject some responsibility into Tesla's governance. It just means we have not seen much of the evidence so far. Which, in the first place, weakens the whole meaning of this appointment.

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