Friday , December 4 2020

Why the appointment of Robyn Denholm as chairman was a problem for Tesla



That is not a comment about Denholm's career. He has a lot of senior experience in companies including Telstra, where he was recently appointed as head of finance and strategy, and Juniper Networks, where he was head of finance and operations. He left Telstra to focus on his new role, while waiting for the six-month notification period.

Illustration: John Shakespeare

Illustration: John ShakespeareCredit:

The problem, as Musk's tweet was accidentally highlighted, was that Denholm had been on the Tesla board for almost half his life as a public company. This is problematic for two reasons.

The first is that it is a lost opportunity. Recall that Musk had to give up his chair at the head of the table to settle with the Securities and Exchange Commission, which accused him of misleading shareholders with a half-baked personal tweet in August.

The broad impetus of the solution was to improve the lack of effective governance and oversee the strange episodes that were exemplified. In addition to separating the CEO and chairman role for at least three years, Tesla agreed, among other things, to appoint two new independent directors and institutionalize better control of the company's external communications, including Musan's own.

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This gave Tesla the chance to appoint someone from outside the company, preferably someone with extensive experience in automotive manufacturing, and definitely someone who had never worked with Musk before. According to Tesla's proxy statement, Denholm has some previous experience in the financial role at Toyota, but the real problem is Tesla assigns insiders when outsiders will signal real change.

The second problem is that, as an insider, Denholm has allegedly provided independent oversight for some of the most disturbing periods in Tesla's history; exactly the periods when the supervision appeared – how to put this? – very subtle from an outside perspective.

He, of course, was part of a special committee that was assembled and then dismantled for 17 days taking whatever it was.

Denholm is also part of the council that didn't manage to control Musch's increasingly strange Twitter habits – which, behind, look like the beginning of "guaranteed funding" announced today August 7.

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As part of the compensation committee, he also had a role in setting up Guntan's new salary package earlier this year, which was agreed upon by shareholders after two large advisory-proxy companies gave him a thumbs down. Up front, after receiving total compensation of nearly $ 5 million in 2017 (almost all of them in stock options), Denholm is the highest paid board member whose compensation is far above their counterparts in the same company and sits at odds with its real use .

Denholm is also, of course, part of the board that approved the takeover of Tesla from SolarCity in 2016. The agreement, which nearly doubled Tesla's debt, was referred to by a proxy-advisory firm as a "covert bailout plan" for a struggling company. where Musk is the main shareholder and chairman, and the CEO is his cousin.

I am reminded of this in Tesla's latest quarterly SEC submission. This revealed that, in August, Tesla cashed chief technology personnel from Musk and SolarCity – another cousin – at $ US $ 1.5 million from promissory notes that effectively the old "Solar Bonds" they bought from SolarCity shortly after the acquisition was announced .

None of this meant that Denholm could not somehow assume a stronger position as chairman and inject some accountability into the Tesla government. That means we haven't seen much evidence so far. Which somewhat brought down all the points of this appointment in the first place.


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