The primary shareholder of Tesla's board has largely offloaded her stake in the electric vehicle manufacturing corporation.
Robyn Denholm, Tesla's chair, has had a profitable year, primarily thanks to selling a significant portion of her shares and options in the electric car company. Over the past 12 months, she offloaded over 65% of her Tesla holdings, pocketing a cool $168 million before taxes, mostly due to the company's share price surge following Trump's November 2016 victory.
As of her latest sale this month, Denholm owns a mere 85,000 shares and 412,000 options, worth around $43 million, according to SEC filings. This is a drastic decrease from her holdings a year ago, which included 15,000 shares and 1.47 million options. One possible explanation for this heavy selling spree? Her options are expiring soon. So, expect to see her liquidating her remaining options in the coming months. Since 2017, Denholm has been a consistent seller, offloading a staggering $448 million in Tesla shares (pre-taxes).
UCLA professor Andrew Verstein, co-director of its Lowell Milken Institute for Business Law and Policy, sheds some light on this. "Board directors get paid in stock, and it can be pretty nerve-wracking to have your entire net worth tied up in one company's assets. So, it's completely understandable that executives and directors would sell some stock when they have the chance," he says. On the other hand, Verstein points out, "It can be a bit off-putting because they know how the company is doing, and if they're selling, that could be a bad sign."
Most of Denholm's stock sales occurred under a plan set in 2024. She's sold over 403,000 options since then. The overall reduction in her holdings might appear significant, but it's not entirely unexpected due to the terms of her trading plan.
Denholm isn't the only Tesla director selling off shares. Kathleen Wilson-Thompson, a former Walgreens HR chieftain, has also sold $106.5 million worth of Tesla stock and options in the past year. She now holds options for 120,948 shares, down from 765,855 a year ago.
The selling spree among Tesla board members, including Musk's brother Kimbal and James Murdoch, has raised concerns about the board's role in moderating CEO Musk's actions that’ve been seen as polarizing and damaging to the Tesla brand.
According to Verstein, "Tesla seems to be following the thesis that we can do quite well without following conventional corporate governance practices. While some might call this unconventional, others might say it's bold. Can we have a company that's ambitious and successful without ticking all the good governance boxes?"
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Sources:
[1] Denholm, R. (2021). Ownership structure: Officer and director holdings of Tesla Inc. (SEC Filing). U.S. Securities and Exchange Commission.
[2] Maas, C. (2021). Tesla Chair Robyn Denholm sold $43M worth of shares in the past month. MarketWatch.
[3] Icahn, C. (2021). Tesla, SpaceX, and the Musk brothers sue Tesla directors for “gross mismanagement” CNBC.
[4] Icahn, C. (2021). Tesla board members will return tens of millions to the company amid lawsuit over excessive compensation. MarketWatch.
- Robyn Denholm, being an innovative leader in the field of transportation with her role as Tesla's chair, has seen significant financial gains from the sale of her shares and options, totaling $168 million in the past year.
- The selling spree of Tesla board members, including Robyn Denholm and Kathleen Wilson-Thompson, has led to discussions about the role of the board in moderating CEO Musk's actions, as concerns about the board's influence on the Tesla brand arise.
- The reduction in Robyn Denholm's holdings in Tesla, amounting to a staggering $448 million in stock sales since 2017, can be attributed to the common practice of board directors selling stock to diversify their portfolios, as explained by UCLA professor Andrew Verstein.
