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New Tesla chairwoman Robyn Denholm's tallest order: Shareholders want a more 'boring' Musk 

Edward McKinley, special to
Key Points
  • New Tesla chairman Robyn Denholm has been tapped to help Elon Musk run the electric car and energy company after an SEC settlement mandated Musk give up the chairman title.
  • Denholm has experience in both the auto and technology industry and already serves as a Tesla board member.
  • Critics have already come out to say she will be no more than a rubber stamp for Musk's decisions; others that she may be able to counterbalance his impulsive ways.
  • The Australian executive isn't well-known, but has provided some public views in the past on leadership, risk-taking and business transformation.
Robyn Denholm replaces Elon Musk as Tesla's board chair

Elon Musk has a new boss, and she is not well-known to the public.

Tesla announced on Wednesday night that Australian telecom executive and chair of Tesla's audit committee Robyn Denholm will take over from Elon Musk as chair of the company. Musk agreed to surrender the position for three years in his settlement with the SEC over fraud allegations that grew out of a Musk tweet claiming he had a deal to take the company private. The deal never materialized and the actual capital commitments Musk said Tesla had lined up have been questioned.

Denholm, who was one of three Tesla board members to review the privatization idea, is from Australia, and has worked for Toyota, Sun Microsystems, Juniper Networks and Telstra. She was just promoted from COO to CFO and head of strategy at Telstra, Australia's largest telecommunications company, in October, and as a result, the announcement that she is taking the Tesla chairman role was viewed as abrupt by analysts who cover the Australian company. She will officially depart from the company, which at a market cap of roughly $36 billion is a little more than half the size of Tesla's $60 billion value, in six months to focus on her new gig at Tesla full-time.

Here are a few things to know about Denholm and current issues faced by Tesla as she steps into a high-profile role at the electric car and energy company.

1. The new Tesla chair comes from a company facing shareholder pressures

Telstra shares have underperformed, according to Morningstar data, down 10 percent year-to-date and 6 percent in the past one-year period.

Telstra is very different from Musk's electric car and power company, situated in the defensive telecom sector know for high dividends rather than high growth. But Telstra, the most widely held retail stocks in Australia due to its dividend, has faced its serious financial and strategic issues of late, with angry shareholders attacking executive pay at its recent annual meeting, amid concerns about decreasing dividend payouts. The company's shares hit a seven-year low during 2018 as institutional shareholders pressed for a dividend cut to preserve cash and questioned management strategy amid earnings and margin pressure caused by the rapid changes in mobile and internet sectors.

As a financial executive, one of Denholm's biggest strengths in her role may be to help Tesla manage its debt as it strives for the profitability on a consistent basis that always has eluded it. Telstra's carries a significant amount of debt, not uncommon for the capital-intensive telecom business. Telstra's debt to equity ratio is 1.02 percent currently, according to Morningstar, versus 2.22 for Tesla.

2. Past Denholm comments about business can appear conventional compared to Musk. That may be a good thing, because Musk needs to 'be boring,' a Tesla billionaire shareholder recently said.

Musk has a history of saying too much, and is the most heavily covered CEO in the market. He has even discussed his manic highs and lows in a manner not typical of corporate leaders. Denholm is not a celebrity capitalist, though she was interviewed by the Australian edition of Vogue, and over the years, in print and video interviews and articles she has penned, Denholm has spoken about issues that will factor in Tesla's future: risk-taking, business transformation and balancing work and life as a leader.

Her comments often can read as if they come straight from the contemporary corporate playbook, but a former colleague described her in am email to CNBC as "charismatic" and added that "she naturally draws people in to want to follow her."

For Tesla shareholders who have been through extraordinary ups and downs with Musk over the past year, a more conventional view at the top may be what is needed right now.

Billionaire fund manager and major Tesla shareholder Ron Baron — who speaks to Musk regularly — told shareholders of his funds on Friday at his annual conference in New York City that while he has told Musk he should never feel forced to lose "the you in you" in recent conversations between the two, "I keep saying 'be boring, be conventional as much as you can.'"

Baron, who told CNBC last week that Musk does not need "adult supervision," also told his shareholders that some of the criticisms of Musk have been unfair given what he has accomplished already: since Baron's funds bought Tesla in 2014, the electric car company has grown annual sales from $3.7 billion to $20 billion.

Ron Baron, founder of Baron Capital, is a Tesla shareholder and a big believer in Elon Musk's vision of the future. Baron believes Tesla can grow sales to $1 trillion in 12 years. 
Anjali Sundaram | CNBC

3. Critics say Musk sometimes does too much himself. Denholm likes to mentor.

Musk has been accused by some critics, including Tesla workers, of trying to do too much, and as a result, setting Tesla back rather than helping it to reach goals in the most effective manner. As production snafus with Tesla's Model 3 led to repeatedly missed targets, Musk become even more adamant about personally overseeing the car production line and has been accused by Tesla insiders of "extreme micromanagement."

Denholm, 54, who graduated from the University of Sydney with a degree in economics and went back to school later to get her master's in commerce from the University of New South Wales in Australia, has made a point of focusing on bringing up the next generation of talent.

"Even before I knew it was called mentoring I used to spend a lot of time with people that were up-and-coming talent within the various organizations that I've worked with," she said in a television interview.

"Fostering a community of peers is one of the most important things a mentor can do. Get people together and they can solve anything, whether they're male or female," she told the Australian in 2016.

Specifically, she mentioned "mentoring the next generation of CFOs" as a primary responsibility.

Tesla's balance sheet management will continue to be a key issue. The company's current CFO Deepak Ahuja was also Tesla's first CFO. He came back to the company last year after retiring when its financial troubles mounted. Since returning, Tesla has made large staff cuts and cost-cutting moves involving its suppliers

Tesla, one of the most-heavily shorted stocks in the market, has been through a difficult period that culminated in the SEC settlement. The company just turned in a profitable quarter, but has never been able to sustain profitability. It also has a high level of debt, roughly $10 billion, which will need to be paid off in the years ahead and has yet to reach the production scale on its Model 3 that will allow it to offer the car at a mass-consumer price which is critical to its goal of sustained profitability and no longer needing to go back to the capital markets for additional funding..

4. Tesla's board independence has long faced skepticism. Denholm is among the members considered 'independent' by outside experts.

The Tesla board has been criticized for too many members having personal ties or business ties to Musk, including his brother Kimbal Musk. Denholm was originally appointed to the board and to chair the company's audit committee in 2014 when Brad Buss, who is still on the Tesla board, took the CFO position at SolarCity, a company which at that time was run by cousins of Musk, and has since been acquired by Tesla.

Tesla considers all of its board members accept for Musk and his brother, Kimbal, to be independent directors. But Institutional Shareholder Services, a major proxy advisor firm for stock shareholders, considers only five of Tesla's nine directors to be independent, including Denholm.

Denholm has been on the Tesla board since 2014, a fact that skeptics have pointed to this week in saying she is not a true outsider pick for chairman. The Tesla board has a history of expressing full support and confidence in Musk no matter what outside questions are raised, or stock drops suffered by the company's shareholders after Musk surprises. The board was not informed of the ill-fated private deal before Musk tweeted that the funding had been secured, and when Musk pulled out of an SEC settlement at the last minute, a move that shocked many corporate and legal experts who saw the deal as a gift from the SEC, the board released a statement expressing support. Within days, Musk changed his mind and accepted a slightly more harsh SEC deal.

The board, including Denholm, has faced lawsuits from shareholders over the privatization issue. The FBI and Department of Justice have been investigating Tesla's Model 3 production reporting as well.

Critics have said that at worst, Denholm will be no better than a rubber stamp for Musk's decision; at best, Denholm can serve as a counterbalance to Musk's most-impulsive ways.

Joe Pollard, former chief marketing officer at Telstra, told CNBC via email that Denholm always listens to a broad range of input and "is incredibly focussed on delivery by holding people to account. Nothing is ever left unsaid — no matter how unpopular."

5. Tesla's board has been criticized for a lack of diversity in the past. Denholm has spoken up about diversity.

Tesla's board of directors hasn't only faced criticism about its independence. It has faced criticism for its lack of diversity. It includes seven men and two women, and the only other women on the board, Linda Johnson Rice, CEO of Johnson Publishing, which owns Ebony, was first added to the board in 2017.

Denholm has spoken repeatedly over the years about the value of diversity in business.

"I think having people from diverse backgrounds, diverse genders, really adds to the fabric of how you solve problems and actually take advantage of opportunities," she said in a Telstra video blog.

"I came up through the ranks at a time when there were very few women leaders. Most of my mentors were men," Denholm said in the interview with the Australian. "A lot of people, and it's valid, talk about gender diversity and ethnic diversity, but to me the root of all of that is actually how people think and the experiences they've had. … I don't care what people look like. If everybody thinks the same way they won't create the next wave of innovation. They need differences of opinion and differences in life experiences."

"Having diverse experience and being able to share that diversity of thought is very helpful when you are sitting around the table working through challenges or toward opportunities," she said in a Russell Reynolds Associates report on the perspective of female board members. "Having dissimilarities makes for more robust conversations and probing questions."

Pollard said that he worked with Denholm on diversity at Telstra and she made inroads in changing the make up of what were male-dominated groups like engineering and technical operations.

Denholm is not the first woman Musk has elevated to a top position working alongside himself: Gwynne Shotwell is president and COO of SpaceX, the private space company led by Musk. 

6. Musk takes many risks, often on Twitter. Denholm was virtually non-existent on Twitter — before this week.

Musk's obsessive nature doesn't only surface in the workplace, but on Twitter, and not always to his or his shareholders' benefit. After reaching the settlement with the SEC, Musk mocked the agency on Twitter.

Denholm, like many corporate senior executives, has had no Twitter presence, but that did not stop some social media users from making one for her this week in a stunt that made it seem that the new chairman had joined her CEO and took to his favorite communication tool for the first time after the Tesla announcement. Her first faked retweet was an actual message from Musk thanking her for taking the chairman role. Tesla is currently attempting to have the fake Denholm Twitter account removed, according to a spokeswoman, an official one, who said Denholm has in the past had her own Twitter account but she did not use it. The fake Denholm account was still up on Twitter as of Sunday morning.

Although Denholm is not one for extreme risks, online or offline, she has spoken about liking to push the envelope.

"I don't jump out of planes or bungy jump or any of that stuff, but I do take professional risks," she said in an online interview. "You make the best decisions you can with all the information you have — and you have to move quickly. You're not pushing hard enough if you never make mistakes."

"Fearless and focused," is how her former Telstra colleague Pollard described her.

7. Musk has worked 120 hours a week. It is unclear if Denholm's views on work/life balance will be a check on that obsessiveness.

Responding to his own shareholders' concerns about their exposure to Musk in funds, Ron Baron said in a broader defense of Musk on Friday that, "he drives himself to extremes, he works 120 hours a week and I'm sure he doesn't think clearly all the time."

From limited comments Denholm has provided on balancing the personal and the professional, it isn't clear that she — and to be fair to her, really anyone — could rein Musk in when it comes to his fundamental approach to life and work.

"I believe that you have one life, you need to live it to the fullest. My philosophy is to be clear about what matters most to you and integrate the things that you love to get the most out of life. I love my family first and foremost and I love my work, and so my family plays an important role in my career – they know what I am doing at work and support me in what I am trying to achieve," she told the Australian edition of Vogue last summer.

"I also put a lot of effort into being present when I'm at home. That means being focused, in the moment, not thinking about work all the time. At work, I try to do the same thing. The best advice I was ever given was to be very thoughtful and focused about where you spend your time, both at home and work and once you have made your choices about how to spend your time get on with it and don't fret about them," she said.

Pollard said that at Telstra, Denholm was a big supporter of flex positions that enabled people to work from anywhere, at anytime, "but like all senior executive roles, the hours are long and the pressure is intense."

8. Musk's mind is always going. Denholm expects non-stop change.

Musk recently said on the Joe Rogan podcast — the same one where he took a puff — that his mind is a "never ending explosion of ideas."

Tesla isn't just trying to make more Model 3 cars. It plans to make an electric long-haul truck, it is building out its battery gigafactory, it runs one of the largest residential solar installation businesses in the U.S., and it is expanding its manufacturing to China, among other efforts in the broader vision of not only disrupting the auto industry but the utility industry as well.

Denholm spoke about business transformation in a March video interview.

"I think that transformation sometimes is an overused word, but to me, actually, changing the way a business is performing, whether its from an industry perspective or whether it's just the next phase of the company's journey, is a very important skill set," Denholm said. "To me, it always starts with the people. Where are we, from a business perspective? What's the strategy that we're trying to invoke? And then making sure that people understand where the company is trying to go and what the necessity is from a transformation perspective. And so, I think that's a core ingredient and then being very clear. So strategy, people and then making sure that people understand the technology roadmap and what the business processes are that you're trying to transform to achieve all that."

Pollard said Denholm's experience across financial, technical and operational issues, "is staggering" and was seen at Telstra in planning the buildout of the 5G network in Australia.

"I think you're never done transforming," she said in the March interview. "So, it's one of those things that you start on a particular path and then at some point you've finished that section of the road, if you like, and then you're actually moving on to the next section where you're transforming."

—Edward McKinley, special to

This story has been updated to include recent news about Tesla and Denholm's current employer, Australian telecom company Telstra.