TLDR
- Tesla Chair Robyn Denholm sent a letter warning Elon Musk could leave as CEO if shareholders reject his $1 trillion compensation package
- Shareholders vote November 6 on the performance-based plan requiring targets like $8.5 trillion market cap and 1 million Optimus robots shipped
- The package would boost Musk’s Tesla stake from 13% to 29% over the next decade
- ISS and Glass Lewis proxy firms advised voting against the plan, which Musk criticized during Tesla’s earnings call
- Musk’s previous 2018 pay deal was struck down by a Delaware court for improper approval by non-independent directors
Tesla faces a crucial shareholder vote that could determine Elon Musk’s future with the company. Board Chair Robyn Denholm issued a warning Monday that the CEO might step down if investors reject his proposed $1 trillion pay package.
The letter arrived ahead of Tesla’s November 6 annual meeting. Denholm asked shareholders whether they want to keep Musk leading the company through its expansion into artificial intelligence and robotics.
The compensation plan includes 12 tranches of stock options linked to performance milestones. Musk must achieve goals like increasing Tesla’s market value to $8.5 trillion by 2035 and delivering 1 million Optimus humanoid robots.
This proposal replaces Musk’s 2018 compensation agreement. A Delaware judge invalidated that earlier deal, ruling it was negotiated by board members who weren’t sufficiently independent from Musk.
Pay Package Details and Ownership Stakes
The new plan would increase Musk’s ownership from 13% to nearly 29%. Denholm told CNBC that voting control matters more to the Tesla CEO than the money itself.
Elon Musk has stated he wants more influence over Tesla’s direction as the company develops AI technology. During last week’s earnings call, he said he doesn’t feel comfortable building advanced robotics without adequate voting power.
Two major proxy advisory firms recommended against the package. ISS and Glass Lewis both issued guidance telling shareholders to vote no, prompting Musk to label them “corporate terrorists.”
Board’s Case for Retention
Denholm’s letter emphasized that Musk’s leadership is critical for Tesla’s continued success. She warned the company risks losing his contributions in technology development and strategic vision.
The board chair said Tesla could function as a standard automaker without Musk. However, she argued that shareholders deserve a company that pushes boundaries in autonomous vehicles and robotics.
The compensation structure requires Musk to remain CEO for at least seven and a half years. Each tranche of stock options unlocks only when specific performance targets are met.
Denholm also asked investors to re-elect three directors who have long tenure with the company. Tesla’s board has faced criticism for years regarding its independence and oversight of Musk’s multiple business interests.
The letter framed the vote as essential for keeping Tesla competitive in emerging technology markets. Musk has built other companies including SpaceX and xAI while serving as Tesla’s CEO.
The November 6 vote will reveal whether shareholders believe the compensation package serves their interests. The outcome could reshape Tesla’s leadership structure and future strategic direction.
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