Tesla’s chair on Elon Musk: ‘I might wake up to a tweet. I don’t wake up to a strategy shift’

Robyn Denholm, Tesla’s Sydney-based chair, is used to waking up to unexpected tweets from the carmaker’s chief executive Elon Musk.

“If I had a magic wand, Twitter wouldn’t exist,” she joked in a rare interview with the Financial Times.

Musk’s provocative posts on the social media site he bought in 2022 and later renamed X have landed him in trouble with regulators and governments — and caused problems for Tesla’s own directors. The billionaire wrote on the platform in January that Tesla would “move immediately” to hold a vote on reincorporating in Texas, following a Delaware court’s damning ruling that voided his record $56bn pay package.

This put the carmaker’s board in a tricky position. It had to follow proper process by forming an independent committee to analyse a potential move. While they ultimately came to the same conclusion, the pre-emptive tweet made it harder to rebut the court’s judgment that they were “supine servants of an overweening master”.

“Do we have tough conversations about tweets? Absolutely,” Denholm told the FT. But, she said, “he’s a contrarian, and you can’t be a contrarian part of the time, so you’ve got to work with that as a board . . . I might wake up in the morning and read a tweet that I wasn’t expecting. I don’t wake up to a strategy shift that we haven’t talked about”.

Overseeing the erratic entrepreneur as he runs the world’s most valuable carmaker is one of the toughest jobs in corporate America. But Denholm faces the defining moment of her six-year tenure: convincing shareholders at Tesla’s annual meeting next month to award Musk the largest payday in US corporate history, while galvanising its mammoth base of retail investors to back the Texas plan.

Her reputation is on the line. The Delaware ruling blasted Denholm for a “lackadaisical approach” to governance and suggested her objectivity had been compromised by “life-changing” sums of money. She made $280mn selling Tesla shares in 2021 and 2022 alone, dwarfing the earnings of peers at the likes of Apple and Google.

Denholm, 60, the only woman to chair a “magnificent seven” US technology company, must navigate all this from her home 13,000 miles from Tesla’s headquarters, as its stock is plunging amid flagging global demand for electric vehicles, while executing the largest lay-offs in its history as part of a strategic push to focus more heavily on artificial intelligence and robotics.

Although Musk’s tweets present difficulties, she owes her job to one of them — a 2018 post that he had “funding secured” to take Tesla private at $420 a share, which prompted a surge in its stock and charges of securities fraud.

Musk’s settlement with the Securities and Exchange Commission a month later forced him to step aside as chair for at least three years and pay a $20mn fine, while requiring him to get approval for his tweets from a Tesla lawyer.

“It was like, ‘Robyn, what the hell have you done?’,” she recalls friends saying of her agreement to replace him. Although she had been a Tesla director for four years, by 2018 Musk had become a loose cannon on social media and the company was one of the most shorted in history as mounting losses stoked fears it could go bankrupt. “I was not ready for the public focus on that move,” Denholm said. “I didn’t warn my mum.”

With a long career in operations and finance, most recently before chairing Tesla as chief financial officer of Australian telecoms group Telstra, Denholm is firm but low-key. She has spent her time at Tesla carefully avoiding the spotlight, as the superstar CEO has eclipsed the visibility of her and the rest of the board.

Yet the scale of the task ahead as the annual meeting approaches means she has to do “uncomfortable things like talk to the press”. To reincorporate in Texas, Tesla must win support from 50 per cent of its outstanding shares, with uncast votes counted as “no”.

Since Denholm became chair, Tesla has become profitable after years of losses and missed production targets. Its workforce has grown to 140,000 from about 50,000, while its annual car sales have soared to 1.8mn from fewer than 250,000.

She dismisses the notion that her role requires her to babysit Musk, saying his behaviour is outside her remit.

“To me, the role of the chair is really to make sure the board has a good relationship with the CEO and the executive team,” she said. “We’re there on behalf of shareholders to make sure that management is doing their job, and their job is primarily to grow shareholder value over time.”

Musk has attracted controversy over his drug use, openly admitting to medicinal use of ketamine and smoking marijuana during a live interview. But Denholm said reports in the Wall Street Journal that Musk had also taken LSD, cocaine, ecstasy and psychedelic mushrooms at parties, and that Tesla board members were privately concerned, were “absolute BS . . . I have been around this company for 10 years and I have never seen any evidence”.

Tesla shares soared during the pandemic, with its market value passing $1tn in October 2021, but this has since slumped to about $550bn. First-quarter delivery numbers this year missed the lowest Wall Street estimates, and it reported its first year-on-year sales decline in four years.

The company’s entire board — which includes venture capitalist Ira Ehrenpreis, Airbnb co-founder Joe Gebbia, former 21st Century Fox CEO James Murdoch, ex-Tesla chief technology officer JB Straubel and former Walgreens executive Kathleen Wilson-Thompson — has been mobilised. They have spent the past two weeks alongside Denholm lobbying investors in New York and California about Tesla’s plans for the future. Kimbal Musk, Elon’s brother, is also a director but was exempted from the shareholder outreach drive.

Operating quietly behind the scenes at Tesla became much harder for Denholm in February when the Delaware judge questioned the directors’ independence, saying: “Musk operates as if free of board oversight.”

The ruling noted that some directors, including Murdoch, had taken joint family holidays with Musk, while Antonio Gracias, a private equity veteran who left the board in 2021, had interests worth more than $1bn in Musk-controlled companies.

But Denholm strongly rejects any suggestion that the directors do not function correctly. “The board is so diligent and so effective as a board in terms of [making] sure that the management team are doing their job,” she said. “Everybody spends an inordinate amount of time and energy not just working with Elon, because obviously we do that, but also working with the [rest of the] management team.”

The judge also singled out Denholm herself, pointing to the fortune she had minted from Tesla shares and accusing her of being “lackadaisical in her oversight obligations” — a claim Denholm also rejects.

“That is crap,” Denholm said. “I had to look up that word . . . I will tell you, anybody who knows me, knows that I am not lackadaisical, now that I know what that word means. It is probably the furthest from the truth. I am really intense and very diligent in what I do.”

She dismissed criticism of her stock awards with the same argument she uses to justify Musk’s pay package: her shares have gone up in step with the company, which is good for everyone.

For Denholm, the life-changing wealth has only increased her independence. “If I didn’t agree with something that was going on at the company, I could walk away tomorrow,” she said. “The fact that you’ve sold shares makes you more financially independent.”

And she was also disparaging of the judge’s claims that she is too close to Musk — rejecting this, too, as “absolute BS”.

Tesla is appealing against the decision, whether its shareholders vote to move the business to Texas or not, according to Denholm. A successful appeal would also stop lawyers for the plaintiff that brought the challenge against Tesla taking in fees of about $6bn in the company’s equity — a quirk of the Delaware court system and a sum she slammed as excessive. “I mean, six-and-a-half billion dollars for a few days in court,” she said.

The shareholder vote on June 13 could have big implications for the future leadership of Tesla. Musk, who splits his time between running several other companies, including rocket builder SpaceX, brain implant technology group Neuralink and X, has threatened to spend more time away from Tesla if he does not hold about 25 per cent of its shares, arguing he needs a veto to prevent activists from hijacking the company’s AI technology.

Musk sold billions of dollars of Tesla shares in 2021 and 2022, while using more as leverage for loans, to fund his $44bn acquisition of Twitter, which damaged the carmaker’s share price and took his stake below 13 per cent. The controversial compensation plan could rebuild much of his stake, boosting it to more than 20 per cent.

“Knowing Elon, they needed to be really ambitious goals,” Denholm said of the 2018 award. “What we were trying to do was put in a 10-year plan that would ensure his focus, attention, [and be an] incentive.”

Musk achieved all the targets, despite them being branded by critics as “ludicrously ambitious” and a “publicity stunt” at the time. By 2023, revenues were $97bn and adjusted earnings were $17bn. Musk, who receives no salary or other pay from the carmaker, would have received none of the new stock options had the valuation not reached the $100bn mark.

But the board faces a struggle to bring some of its biggest investors onside now the payout is a reality. Tesla’s largest institutional shareholder, Vanguard, as well as several other top-10 investors including State Street and Capital Group, voted against the compensation deal when it was outlined in 2018.

“We expect there to be ongoing conversations with particularly the larger shareholders, irrespective of their points of view in 2018,” said Denholm. In a recent plea to investors she claimed it would be “unfair” not to give Musk what he is due, noting that “Elon has not been paid for any of his work for Tesla for the past six years”.

The decision on Musk’s pay comes at the same time as investors have criticised Tesla for rash strategic pivots and poor treatment of employees.

The CEO has reneged on plans to produce a low-cost model that he had only months earlier promised would be crucial to future growth. Staff received an email last month saying 10 per cent of Tesla’s workforce — at least 14,000 jobs — would be cut, with passes immediately cancelled and internships withdrawn from students. Later that month he fired the 500-person team running its industry-leading supercharger network, including its boss Rebecca Tinucci, although soon had to hire some of them back.

For Denholm, Musk’s blunt move stemmed from a desire to treat staff “as humanely as possible”.

“When we’ve made that call, he rips off the band aid . . . You want to get rid of the uncertainty for employees quickly,” she said. “Could we have done a better job of talking to these people through that or communicating with them a bit better? Absolutely. But that’s not all on him.”

Tesla has weeks until shareholders express their confidence — or misgivings — in its plans for the future, and how well Musk should be paid to achieve them. With votes from retail investors around the world rolling in, the board is braced for proxy reports from the likes of ISS and Glass Lewis, which will advise its big institutional shareholders how to vote.

But even with the latest concerns about Musk and Tesla’s share price, Denholm is optimistic.

“Every shareholder that I’ve ever talked to says that it worked,” she said of the controversial compensation plan, adding: “We get paid in options so if the share price doesn’t move, then we get nothing. That type of philosophy resonates with our shareholders.”