Sunday , June 13 2021

Why the president's appointment of Robyn Denholm is a problem for Tesla



That's not a comment on the Denholm race. She has a wealth of senior experience in companies such as Telstra, where she was recently appointed head of finance and strategy, and Juniper Networks, where she was chief of finance and operations. She is leaving Telstra to focus on her new role, up to a six month notice period.

Illustration: John Shakespeare

Illustration: John ShakespeareCredit:

The issue, as the Musk tweet said involuntarily, is that Denholm was on the board of Tesla 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 leave his seat at the head of the table to settle with the Securities and Exchange Commission, who accused him of cheating the shareholders with their semi-cooked privacy tweets in August.

The broad thrust of this agreement was to correct the lack of effective governance and supervision of the exemplary bizarre episode. In addition to separating the roles of CEO and president for at least three years, Tesla agreed, among other things, to appoint two new independent directors and establish better controls over the company's external communication, including Musk itself.

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This gave Tesla the opportunity to appoint someone outside the company, preferably someone with extensive automotive manufacturing experience, and definitely someone who had not worked with Musk before. According to Tesla's proxy statement, Denholm has some prior experience in the financial roles in Toyota, but the real issue is that Tesla settled in a privileged information when a foreigner indicated a real change.

The second problem is that, as privileged information, Denholm supposedly provided independent supervision during some of the most disturbing periods in the history of Tesla; precisely the periods in which that supervision seemed: how to put this? – intensely subtle from an external perspective.

She was, of course, part of the special commission mounted and then disassembled during that 17-day swirling of private-take-was.

Denholm was also part of the board that did not manage to control the increasingly bizarre twitter habits of Musk, which, in retrospect, seem to be a prelude to the now infamous "financing mission" of August 7.

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As part of the compensation commission, she also had a role in launching the new Musk payment package earlier this year, which was approved by shareholders after two major proxy advisory companies were returned. On this front, receiving a total compensation of almost $ 5 million in 2017 (virtually everything in stock options), Denholm was the most well-paid member of a board whose compensation is well above its colleagues in similar companies and is in disagreement with its apparent utility.

Denholm was also, of course, part of the board that approved the acquisition of Tesla from SolarCity in 2016. This business, which almost doubled Tesla's debt, was referred by a proxy advisory company as a "finely-guarded rescue plan" for a fighter company. where Musk was a major shareholder and president, and the CEO was his cousin.

I remind you of Tesla's latest quarterly report. This revealed that, in August, Tesla expelled Musk and the former SolarCity technology director, another cousin, at $ 842.5 million promissory notes that were actually old "Solar Bonds" that they had purchased from SolarCity shortly after the acquisition.

Nobody means that Denholm can not in any way assume a stronger position as president and assume any responsibility in the governance of Tesla. It simply means that we have not seen so many tests so far. What weakens the whole point of this appointment in the first place.


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