The decision, announced late Wednesday, comes after Musk had settled a securities fraud charge in September with the U.S. Securities and Exchange Commission over his tweets about taking Tesla private. The settlement stripped Musk of the ability to serve as chairman for three years and required Tesla to appoint two new independent directors, establish a new committee of independent directors, add controls for overseeing Musk’s communications and pay penalties.
In a tweet responding to Tesla’s announcement, Musk said he “would like to thank Robyn for joining the team. Great respect. Very much look forward to working together.”
Denholm’s résumé includes seven years in financial management at Toyota in Australia, as well as two decades as a strategy, financial and operations executive at Sun Microsystems and Juniper Networks.
Her appointment could come as a surprise to Tesla watchers or investors who had expected the company to name one of the two new independent directors as chair, bringing on someone who had experience running operations at a manufacturing company and who had not been on the board during recent years, when Musk’s erratic communications on Twitter and Tesla’s production issues caused headaches for investors.
“We’ve been critical of the board in the past, and their ability to rein in Elon,” said Gene Munster, a managing partner who leads research at the venture capital firm Loup Ventures and who described the announcement as a “missed opportunity". Since Denholm has been on Tesla’s board for four years, he said, “we question whether, in her new role, will she have a newfound influence on Elon’s behavior?” But he emphasized his firm remains a big believer in Tesla.
Tesla spokeswoman Caroline Nolan said in an email that Denholm has “substantial experience working in founder-led companies” and that the board “actively continues its search for a two additional independent directors.”
Tesla’s board has been criticized as being too cozy with Musk. In its proxy, Tesla states that only two of its directors — Musk and his brother, Kimbal — don’t meet the independence standards as defined by Nasdaq and that the board “undertook an analysis for each non-employee director and considered all other relevant facts and circumstances.” But the influential proxy adviser, Institutional Shareholder Services, said in a report this year that it considered only five of Tesla’s nine directors to be independent because of professional ties between two other directors and Musk. Denholm was one of the directors it said was independent.
In a letter last week, a group of investors that included officials associated with public pension funds in four states called for even more overhauls to the company’s board than what the SEC settlement required. They requested that Tesla disclose a “refreshment plan” for Tesla’s board, a permanent separation of the CEO and chairman’s job, and other provisions.
New York City Comptroller Scott M. Stringer, who is custodian of the city’s pension fund and who also signed the letter, said in a statement last week that “a truly independent and refreshed board with directors from diverse backgrounds would be able to provide the strong oversight the company clearly needs. Tesla has a chance now, in the wake of the SEC agreement, to restore investor confidence and rebuild the company’s relationship with long-term shareholders.” (Tesla declined to comment last week on the letter.)
Denholm “is one of the independent directors who we appealed to last week," said Dieter Waizenegger, one of the letter’s signers and executive director of CtW Investment Group, an activist group. "We are glad that the board chose her to lead the next phase but [the] big questions are: who will leave the board and who will join? This is only the first step.”
Since the settlement, Musk has appeared to taunt the SEC in posts on Twitter. On Oct. 4, he wrote “just want to say that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!”
Then last Monday, Musk said on Twitter that he was now the “Nothing of Tesla,” writing that he’d deleted his titles last week “to see what would happen.” He then followed that up with another tweet, saying, “legally required officers of a corporation are president, treasurer & secretary. Guess I have to keep 1st one or it will confuse the authorities.”
On Nov. 2, the company described Musk as its chief executive officer in a quarterly filing.