Tesla’s Chair Under Scrutiny for Oversight of Elon Musk

Elon Musk, the chief executive 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 has been led by Robyn M. Denholm, a technology executive who rarely speaks in public outside her native Australia and posts barely anything on X.

To some analysts and investors, Ms. Denholm is the “adult in the room” who has helped Mr. 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 Mr. Musk.

Late last month, a Delaware judge sharply criticized Ms. Denholm’s leadership while striking down Mr. Musk’s 2018 compensation package, which is worth more than $50 billion. Ms. Denholm took a “lackadaisical approach to her oversight obligations” at Tesla, said Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery.

The judge also questioned whether Ms. Denholm could be independent from Mr. Musk, because her job on Tesla’s board had earned her more than $280 million. In court last year, Ms. Denholm described that pay as “life changing.” Her compensation greatly exceeds what other large U.S. companies like Apple and Alphabet, Google’s parent, pay the independent chairs on their boards.

“Musk operates as if free of board oversight,” the judge said in her ruling.

Mr. 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 has its headquarters. The court ruling also means the board must fashion a new pay package for him.

Separately, Mr. 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. Mr. Musk, who owns about 13 percent of the company’s stock, wants voting rights equivalent to at least 25 percent of Tesla’s shares.

Ms. Denholm will be closely involved in any decision to change where the company is incorporated and in negotiations with Mr. 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.

Ms. Denholm has spent over 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 Ms. Denholm at Juniper. “I don’t think you could have found a better chairman for this very unique job” at Tesla.

Perhaps the biggest risk she has taken is agreeing to lead Tesla’s board.

Addressing an audience at an event in 2022 in Sydney, Australia, Ms. Denholm said she had friends who advised her not to accept Mr. Musk’s offer after he agreed to step down as chairman in 2018 as part of a settlement with the Securities and Exchange Commission. The settlement stemmed from Mr. 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 leading the board of a company “with a contrarian founder, and that at the time was not profitable,” Ms. Denholm said, according to reports of the speech. She initially turned Mr. 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, Ms. 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.

Ms. Denholm studied economics at the University of Sydney and started her career at Arthur Andersen, the accounting firm. She had a series of jobs at large companies like 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, Ms. 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 start-ups and owns a 30 percent stake in her hometown’s two basketball teams — the Sydney Kings and Sydney Flames.

Ms. Denholm was not acquainted with Mr. Musk before 2014, when a member of the company’s board recruited her, according to legal filings. While she has praised Mr. 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 Mr. Musk might have chosen Ms. 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,” Mr. Wynn said. “You need somebody who can translate it into action, and be people-focused and keep the operations moving.”

But other experts said Ms. Denholm’s job was not just to complement Mr. Musk. As the leader of Tesla’s board, she has a duty to oversee the chief executive 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 the Leavey School of Business at Santa Clara University. “That has clearly not happened.”

But, Ms. Pozner said, Ms. Denholm may not have been able to manage Mr. Musk because almost all of the other Tesla directors have personal or financial ties to him. One board member is Mr. Musk’s brother, Kimbal. Several others have been close to Mr. Musk personally, professionally or both for many years.

“It doesn’t seem like she was set up for success in reining in Elon Musk,” Ms. Pozner said.

Ms. 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 Mr. Musk’s demand for greater control, Tesla’s stock is down about 24 percent this year because investors are worried about slowing sales and slumping profits.

At a conference last year, Ms. Denholm described how she dealt with uncertainty and doubt. Early in her career, confronted with jitters about a looming international move, Ms. 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.”