Tesla risks losing Musk if $1 trillion pay package isn't approved, board chair says

In a recent communication, Tesla's Board Chair, Robyn Denholm, urged shareholders to support CEO Elon Musk's proposed pay package, which approaches a staggering $1 trillion. This appeal comes as the company prepares for its upcoming annual meeting, where the focus will be on Musk's pivotal role in steering Tesla towards its ambitious goals beyond merely manufacturing vehicles. Denholm emphasized the potential risks of losing Musk, suggesting that without his leadership, Tesla's valuation could suffer significantly. She noted that the company is evolving into a leader in Full Self Driving technology and robotics with Optimus. "Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become," she stated. As the annual meeting approaches on November 6, various groups have voiced their opposition to the pay package. Proxy advisor Institutional Shareholder Services has recommended against it, and a coalition of unions and advocacy groups has launched the 'Take Back Tesla' campaign, criticizing Musk’s political affiliations and the conspiratorial narratives he has supported, which they argue have tarnished the company's reputation. The deadline for shareholders to cast their votes on Musk's compensation and other resolutions is set for 11:59 p.m. ET on November 5. The board's proposal, initially outlined in September, involves granting Musk shares contingent on achieving specific performance milestones, while also increasing his voting power within the company—a request he has made multiple times over the past year. In a recent earnings call, Musk expressed his concerns about having adequate influence over the company's future, particularly regarding the development of the Optimus robot initiative. He asked, "If we build this robot army, do I have at least a strong influence over that robot army?" His current stake in Tesla, approximately 13%, could rise dramatically under the proposed plan, potentially adding over 423 million shares to his holdings. Denholm concluded her letter by highlighting the critical need for a performance-driven compensation structure to retain Musk's leadership, stating, "If we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision, which have been essential to delivering extraordinary shareholder returns." Denholm also called for the re-election of board members Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson.