Author: Neal E. Boudette / Source: New York Times
Six weeks after settling a securities-fraud lawsuit with federal regulators, Tesla and Elon Musk have made good on one of the agreement’s key provisions — naming a new board chief to impose order on a company whose automaking has often been overshadowed by Mr.
Musk’s behavior.The company said a current director, Robyn Denholm, would become its chairwoman immediately. Mr. Musk stepped down as chairman last month but remains Tesla’s chief executive.
Ms. Denholm, 55, is the chief financial officer of Telstra, which dominates telecommunications in Australia. She is a longtime technology executive with experience in Silicon Valley, where Tesla is based, and once worked for Toyota in Australia.
The move to replace Mr. Musk as chairman, announced late Wednesday night, was part of a settlement reached with the Securities and Exchange Commission in September to deal with the fallout from his assertion that he had secured funding for a private buyout of the company. That claim, in a Twitter post in August, quickly fell into doubt. (Mr. 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 the settlement, Tesla agreed to name a new leader for the board, splitting those responsibilities from Mr. Musk’s post as chief executive, by next Tuesday.
The company was also required to add two independent board members and to set up a permanent committee to monitor Mr. Musk’s public declarations, including his Twitter posts. It has several weeks to complete that requirement.
Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said the appointment of Ms. Denholm “technically complies” with the S.E.C. settlement, but he questioned how much Ms. Denholm would be able to push back against a forceful personality like Mr. Musk.
“If the goal is to provide adult supervision, it won’t accomplish that,” Mr. 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.”
Mr. 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 directors who represent them. Production problems only added to those concerns.
Tesla reported a substantial profit in the third quarter, powered by a significant jump in production and sales of its Model 3 sedan. The earnings beat the expectations of many analysts and eased worries about its finances, for now. In the first half of 2018, the company reported losses and used up more than $1 billion in cash.
“They are doing much better than we thought they would a quarter ago,” said Jeffrey Sonnenfeld, a professor at the Yale School of Management. “You have to give them credit for that.”
Yet Tesla still faces challenges. It must prove it can sustain profits in the fourth…
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