Sputnik discussed the issue with Robert Hockett, Professor at Cornell University Law School.
Sputnik: How significant is Denholm's designation as chair of Tesla's board?
Robert Hockett: I think it's quite important or quite significant and that it signals or sort of tells the world that Tesla is trying to get its house in the order.
Musk, of course, is a very remarkable and energetic man, a man full of ideas and he executes many of them but he's clearly a bit overcommitted, he's like one of these very able people who doesn't know when to say no or how to say no because he tends to succeed in what he does most of the time.
So he assumes he can do everything, he's sort of come to realize now that he was a bit overextended and the fact that he's basically stepped down as chair at Tesla and been replaced by Denholm I think is a very effective signal that they got the message.
Sputnik: I think it's very interesting from an onlooker looking into this company, we know that Denholm feeling these boots for three years, he can't return as chairman for another three years. Is she going to be a lame duck so to speak or will she be bound hand and foot now or will other things remain as a status quo, what's your take on it?
Robert Hockett: It's hard to tell as a matter of formalities, it's all going to be a story of practical reality and here's what I mean by that.
So it would be possible for her in effect to sort of remain under the thumb Musk as a practical matter even if it weren't true, it was only a formal matter, sort of written down or formulated company governance principles as found in the bylaws of the firm or with the corporate charter.
That being said, I think it would be somewhat surprising if Musk attempted to continue to really run the firm and to hold sway over the board including Denholm.
Sputnik: Do you think he's got the business acumen to really take this company to the next stratosphere with all these billion dollar turnover companies that he's obviously wanting to aspire to, or does he got that little chink in his makeup and really needs someone like Ms Denholm to bring some calmness and neutrality to a business of this size?
Robert Hockett: In effect what we're trying to do is prognosticate or predict the future and in effect, we're trying to predict the future partly by predicting Musk‘s behavior and how able he might be to kind of bring himself under wraps.
There is a precedent for that existing with others such a folk like Bill Gates who seems to have been able to sort of step back just enough from Microsoft for it to continue as a well functioning combine over the decades notwithstanding having personally sort of started the firm.
And the same could be said about Apple with Jobs, although, of course, as you know he had a lot of frictions between Jobs and Apple in the first period of the company that he founded, but then later on, of course, Jobs got his act together and when he came back he sort of saved the firm and seems to have done a better job delegating at the same time as he kept some responsibilities that second time around.
Sputnik: Tesla made tremendous third-quarter revenue, we know there's obviously a real appetite for this electric car globally, fantastic sales last quarter how could its success be accounted to the controversy? Do you think the controversy is leading the car or is it just the fact that it is an innovative machine or is that a bit of both? We had Steve Jobs and I'm sure that a lot of buying came because of his personality, his presentation, his ability to command such an audience to have such global success. Musk is on the same level, isn't he?
Robert Hockett: The reason they're doing well in the third quarter is that I think the fundamental idea behind the firm is a sound one and, as you noted, there's plenty of appetite for the Tesla cars especially the so-called Model 3 which is much more affordable and much more competitive with Toyota Corollas and Ford Focuses and so forth and so in a sense it's an idea that couldn't help but win if one were to sort of pursue it in a kind of disciplined manner.
I think smart investors are aware of the fact that just because he overestimated his capacity to sort of get up to full speed really quickly doesn't mean that he was wrong in thinking that they would get up indeed to full speed at some point fairly soon. So it's largely a matter of his expectations of himself and his firm slightly out running in a temporal sense the firms capacity, but underlying all of that fundamentally the firm is quite sound.
Views and opinions expressed in this article are those of the speaker and do not necessarily reflect those of Sputnik.