When asked to join Tesla’s board, Robyn Denholm initially turned down Elon Musk, the company’s chief executive, according to legal filings. Photo / Amir Hamja, The New York Times
Robyn Denholm, who has led the electric car company’s board for more than five years, has been criticised for not serving as a check on Elon Musk.
Elon Musk, the CEO and public face of Tesla, is constantly making news and broadcasting his opinions on his social media site X. But the electric car company has another leader — one who maintains a much lower profile.
For more than five years, Tesla’s board of directors has been led by Robyn Denholm, a technology executive who rarely speaks in public outside her native Australia and posts barely anything on X.
To some analysts and investors, Denholm is the “adult in the room” who has helped Musk turn Tesla into the world’s most valuable automaker. But to her critics, she has failed at her most important job: serving as a check on Musk.
Late last month, a Delaware judge sharply criticized Denholm’s leadership while striking down Musk’s 2018 compensation package that is worth more than $50 billion. Denholm took a “lackadaisical approach to her oversight obligations” at Tesla, said Chancellor Kathaleen McCormick of the Delaware Court of Chancery.
The judge also questioned whether Denholm could be independent from Musk, because her job on Tesla’s board had earned her more than US$280 million. In court last year, Denholm described that pay as “life changing.” Her compensation greatly exceeds what other large US companies like Apple and Alphabet, Google’s parent company, pay the independent chairs on their boards.
“Musk operates as if free of board oversight,” the judge said in her ruling.
Musk has railed against the ruling, and he said he planned to ask shareholders to authorize Tesla to move its incorporation to Texas, where the company is headquartered. The court ruling also means that the board must fashion a new pay package for him.
Separately, Musk demanded last month, two weeks before the Delaware ruling, that Tesla’s board significantly increase his control over the company if it wanted him to continue developing products based on artificial intelligence at Tesla. Musk owns about 13 per cent of the company’s stock, and wants voting rights equivalent to at least 25 per cent of Tesla’s shares.
Denholm will be closely involved in any decision to change where the company is incorporated and in negotiations with Musk over his pay and desire for more control. She has said nothing publicly about these matters and did not respond to a request for an interview.
Denholm has spent more than 40 years in operational and financial jobs at big companies in Australia and the United States. She is widely considered a calm, understated presence with an appetite for occasional calculated risks. As chief financial officer at Juniper Networks, for example, she resisted pressure from Wall Street to cut costs and lay off employees, defending the company’s decision to invest in research and development. The strategy paid off, some analysts said.
“She’s very down-to-earth, very straight, very independent-minded, a very relaxed character,” said Pierre Ferragu, a managing partner at New Street Research who covered Denholm at Juniper. “I don’t think you could have found a better chairman for this very unique job,” he added in reference to her selection as chair of Tesla’s board in 2018.
Perhaps the biggest risk she has taken is agreeing to lead Tesla’s board.
Addressing an audience at an event in 2022 in Sydney, Denholm said she had friends who had advised her not to accept Musk’s offer to lead the company’s board after he agreed to step down as chair in 2018 as part of a settlement with the Securities and Exchange Commission. The settlement stemmed from Musk’s claim, on Twitter, that he had secured the funding to take Tesla private even though his plan to do so was in an embryonic state.
Her friends had warned her that she would be agreeing to lead the board of a company “with a contrarian founder, and that at the time was not profitable,” Denholm said, according to reports of the speech. She initially turned Musk down, according to legal filings, but he asked her again, and she agreed and resigned from her job as chief financial officer at Telstra, an Australian telecommunications company.
One of three children of European immigrants to Australia, Denholm, 60, grew up in the suburbs of Sydney, where she attended what she has described as a “garden variety public school.” On weekends and during school vacations, she helped her parents balance the books and service cars at their gas station.
Denholm studied economics at the University of Sydney and started her career at Arthur Andersen, an accounting firm. She had a series of jobs at large companies including Toyota in Australia, where she was among a few female executives, and Sun Microsystems and Juniper in Silicon Valley.
Besides her position on Tesla’s board, Denholm serves as chair for the Tech Council of Australia, the country’s highest-profile technology industry association. She has owned at least three red Teslas, and, in a Sky News interview in 2014, described herself as “genuinely curious.” Her family investment office, started in 2021, has a focus on women-led tech startups and owns a 30 per cent stake in her hometown’s two basketball teams — the Sydney Kings and Sydney Flames.
Denholm was not acquainted with Musk before 2014, when a member of the company’s board recruited her, according to legal filings. While she has praised Musk’s vision, discipline and resilience in interviews, she has mostly avoided discussing him or his erratic comments on X.
Conor Wynn, an expert in corporate decision-making at Monash University in Melbourne, Australia, said Musk might have chosen Denholm because she was so different from him and had skills he might not have.
“You don’t want just the mad genius at the top creating stuff,” Wynn said. “You need somebody who can translate it into action, and be people-focused and keep the operations moving.”
But other experts said Denholm’s job was not just to complement Musk. As the leader of the company’s board, she has a duty to oversee the CEO and do what is best for all of the company’s shareholders.
“When Denholm took over in 2018, it was hoped she would be the adult in the room, possibly even a mother figure who could tame this wild child,” said Jo-Ellen Pozner, associate professor of management at Leavey School of Business at Santa Clara University. “That has clearly not happened.”
But, Pozner said, Denholm may not have been able to manage Musk because almost all of the other directors on Tesla’s board have personal or financial ties to him. One board member is Musk’s brother, Kimbal. Several others have been close to Musk personally, professionally or both for many years.
“It doesn’t seem like she was set up for success in reining in Elon Musk,” Pozner said.
Denholm’s job is likely to get tougher this year than it has been. In addition to looming decisions about the company’s incorporation and Musk’s demand for greater control, Tesla’s stock is down about 25% this year because investors are worried about slowing sales and slumping profits.
At a conference last year, Denholm described how she dealt with uncertainty and doubt. Early in her career, confronted with jitters about a looming international move, Denholm said she called her father for advice.
“He said: ‘Robyn, what’s the worst thing that can happen? You screw up and you have to come home?’” she told an audience in Sydney in May. “I’ve sort of taken that approach.”
This article originally appeared in The New York Times.
Written by: Natasha Frost and Jack Ewing
Photographs by: Amir Hamja
©2024 THE NEW YORK TIMES
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