Tesla names new board chair in settlement with regulators

Tesla names new board chair in settlement with regulators
Elon Musk replaced as Tesla chair
Tesla announced that Elon Musk's replacement as its chair will be Robyn Denholm, currently chief financial officer at Australian telecommunications operator Telstra.

Tesla weathered a rocky few months in the wake of Musk's tweets that he had "funding secured" for a deal, later scuttled, to take Tesla private. Musk and Tesla settled with the Securities and Exchange Commission (SEC) in September after the U.S. agency sued for fraud.

“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,” said Musk. “I look forward to working even more closely with Robyn as we continue accelerating the advent of sustainable energy.”

The settlement required Tesla and Musk to pay a fine of $20 million US each and for Musk to give up his chairman role for three years. The 47-year-old billionaire will remain as chief executive.

Elon Musk stepped down as chair of Tesla last month after the U.S. Securities and Exchange Commission (SEC) sued him for his false and misleading claims of potential taking Tesla private — now known as the 420 tweet. Musk also paid a fine of $20 million for his actions.

Denholm will leave her role as CFO and head of strategy of Telstra once her six-month notice period with the company is complete, Tesla said late on Wednesday.

Tesla appointed Denholm as the new chair of the board of directors. Denholm has been active at Tesla since 2014 but is currently working with Australia-based Telstra as its CFO and Head of Strategy and has put in her six-month notice with the company.

Tesla said Denholm will be serving as chair on a full-time basis. She will temporarily step down as chair of Tesla's audit committee until she leaves Telstra, the company said.

“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,” Denholm said.

In the settlement, the SEC pulled back from its demand that Musk, who is synonymous with the Tesla brand, be barred from running Tesla, a sanction that many investors said would be disastrous.

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"I think this is the best possible outcome for everyone involved," said Ivan Feinseth of Tigress Financial Partners, who rates Tesla "neutral," who added the SEC's penalty was only a slap on the wrist for Musk.

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In this July 8, 2018, photo, 2018 Model 3 sedan sits next to a Model X on display outside a Tesla showroom in Littleton, Colo. (AP Photo/David Zalubowski)

DETROIT – Teslas board has named one of its own as chairman to replace Elon Musk, complying with terms of a fraud settlement with U.S. securities regulators.

The electric car and solar panel companys board on Thursday named Australian telecommunications executive Robyn Denholm as chairman, effective immediately.

Denholm will step down as chief financial officer and strategy head at Telstra, Australias largest telecommunications company, after a six-month notice period. Shell work full-time at Tesla, where she has served on the board since 2014.

Weve got the next-generation Roadster," he said. Fastest acceleration, fastest top speed, best handling. Its important to have an electric sports car thats faster than the fastest gasoline sports car. And it helps address that halo effect that gasoline sports cars have. So I think its important to do that to show that, you know, electric is the best architecture. So… look out Bugatti, Hennessey and Koenigsegg? Its totally possible.

Musk will remain as Teslas chief executive as part of the settlement deal with the U.S. Securities and Exchange Commission. The U.S. agency filed a lawsuit alleging that Musk duped investors in August with misleading statements on Twitter about securing the funding to take Tesla private.

The move vaults Denholm, 55, from relative obscurity into a high-profile position of trying to rein in Musk and manage a company that is struggling to produce vehicles and make money as it attempts to shift the world from fueling transportation with oil to battery-powered electric vehicles.

But there is one type of vehicle Musk definitely has zero plans to build, a motorcycle. Its not happening. Not now. Not ever. I rode motorbikes a lot when I was a kid. So I did, like, dirt biking and then rode a motorcycle on the road. And then I almost got killed when I was 17. Most people are paralyzed, but depending on how you count it, the probability of death in a motorcycle versus a car – its 25 times higher.

Tesla names new chair – World News

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, Denholm said in a statement.

Making a car company successful is monumentally difficult, he said. There have been many attempts to create a car company and they have all failed, even the ones that have had a strong base of customers, thousands of dealers, thousands of service centers, theyve already spent the capital for the factories, like GM and Chrysler, still went bankrupt in the last recession.

Critics of Teslas board have said members lack independence and are too closely allied with Musk, many through financial deals. Musks brother, Kimbal, is one of the members.

“I think what they have to demonstrate is theres a sort of new world order within Tesla — more stringent filters on corporate communications, more objective, well-rounded decisions around corporate governance,” Consumer Edge Research analyst Jamie Albertine told CNBC. “I just hope that theyre aware of the gravity of the bigger looming question: the broader independence of the board of directors relative to management.”

Tesla names Robyn Denholm as new chairwoman to replace Elon Musk

Although Denholm appears to have fewer ties to Musk than other directors, she still was on the board through numerous cases of bizarre behaviour by Musk, including his surprise tweet to take Tesla private, smoking what looked like marijuana during a YouTube interview, and labeling a British diver a pedophile in a dispute over the rescue of Thai youth soccer players who were trapped in a cave.

The lack of fanfare around the selection in and of itself runs counter to Musks and Teslas recent volatility. The companys stock saw a period of wild swings, spurred by an Aug. 7 tweet from Musk about taking the company private. Denholms appointment, by contrast, is almost boring, experts said. The announcement contributed to only modest gains for Tesla on Thursday. The stock was up 1 percent.

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A corporate governance expert questioned whether Denholm is the right person for the job, given that she was a member of Teslas board for four years yet failed to rein in the visionary yet erratic Musk.

“I could dream up 10 people from the outside that could be chairperson, but I dont really know, from an ivory tower, if that makes sense,” Baird analyst Ben Kallo told CNBC. “We all want a superstar — Larry Ellison at some point, or [Sheryl] Sandberg from Facebook — and as much as that sounds good on paper, in reality this is probably a smarter, more measured decision.”

She was there while all of this was going on, said Charles Elson, director of the corporate governance centre at the University of Delaware. Do you ask the person who helped get you lost in the woods to help drive you out of the woods?

Elson said the company should have brought in someone from outside to be chairman, and that no matter how talented Denholm may be, she has a shadow over her of being on the board that did little as Musk misbehaved. You really have got to wonder, he said. No other CEO of any other public company would have survived this.

“Shes always been a voice of good logic and reason [on the board] and helped balance out… anyone that would just go with the flow with Elon,” Kallo said. “Can she check Elon? Im not sure, and Im not sure if anyone could check him. Maybe his brother, but I think if they had his brother as chairperson everyone would be up in arms.”

Making Denholm a full-time chair also creates governance problems because she could become a Tesla executive, blurring her role as an independent check on management, Elson said.

The company has seen months of turbulence related to the public behaviour of Musk, whose gift for self-promotion has made Tesla one of the worlds most talked-about businesses while causing spats with journalists, analysts, Wall Street investors and rapper Azealia Banks.

There was little reaction to the appointment from the markets Thursday. Tesla shares rose slightly to $349.34 in premarket trading.

I dont like people wasting resources, or if people and entities dont live up to their potential. And politeness costs you absolutely nothing. It doesnt matter whether you are the most senior person in the room, or the most junior, she told the paper.

Under the settlement, Tesla also is required to appoint two new independent directors, and it must review the sometimes-erratic Musks posts about the company on Twitter. Musk and Tesla each had to pay a $20 million penalty under the September deal with the SEC, and he cannot return as chairman for three years.

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Denholm has auto sector and Silicon Valley experience. She was chief financial and operations officer at Juniper Networks for nine years, and worked at Sun Microsystems. She also has held financial management posts at Toyota Motor Corp. in Australia. Telstra is the largest telecommunications company in Australia.

She has overseen business model transformation, supply chain and broader business process re-engineering. She has been a senior executive and director in a range of complex technology environments which make her ideally qualified for the role.

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On Twitter Thursday morning Musk wrote that he has great respect for Denholm. Very much look forward to working together, he wrote. She has made significant contributions as a Tesla board member over the past four years in helping us become a profitable company, Musk said in a company statement.

While Tesla is finally starting to make good on Musks promises on production of the Model 3 sedan, seen as crucial to the companys future, it has lost senior executives for sales, human resources, manufacturing and finance in recent months.

Tesla earned a $311.5 million net profit during the third-quarter, delivering the first step of a promise from Musk to post sustainable profits. It was only the third time that Tesla has posted a quarterly profit in its eight-year history as a public company and the first time in two years. Telsa has never reported an annual profit.

A big jump in Teslas output of its mass-market Model 3 car powered the breakthrough. The manufacturing increase and moneymaking quarter are two things that Musk promised would happen.

Apart from appointing a new chairman under the settlement, Tesla was required to appoint two new independent members to its board. The aim is to provide stronger oversight to match Teslas growing stature and market value.

Tesla names director Denholm as chair after Musk rows

Musk, whose name is virtually inseparable from Tesla, has an impulsive streak that caused trouble when he tweeted in August that he had funding secured for taking Tesla private at $420 per share when no such deal had been worked out.

That drew attention from the SEC because the tweet pushed up Teslas stock price and harmed short-sellers who bet that the share price would fall.

As part of Musks settlement with the SEC, Tesla also is supposed to monitor Twitter posts that he makes if they are related to developments at the company. But even after the settlement was announced, Musk taunted the agency, calling it the Shortseller Enrichment Commission before snidely praising it for doing incredible work.