Elon Musk could resign as CEO of Tesla if shareholders reject his proposed $1 trillion compensation package, Tesla Board Chair Robyn Denholm has warned.
Denholm issued the alert in a letter to shareholders on Monday, 27 October, ahead of Tesla’s annual meeting on 6 November, where investors are set to vote on the unprecedented pay plan.
The warning comes as two major proxy advisory firms, Glass Lewis and Institutional Shareholder Services, have strongly recommended that shareholders vote against the proposal. Proxy advisers carry significant influence, especially over large institutional and passive fund investors with substantial holdings in Tesla.
The controversial compensation package is intended to retain and motivate Musk, encouraging him to remain at the helm of Tesla for at least another seven and a half years. Denholm stressed that Musk’s leadership is “critical” to the company’s success and cautioned that without proper incentives, Tesla risks losing his “time, talent, and vision.” This is particularly important as Tesla aims to become a global leader in artificial intelligence and autonomous technology.
Under the proposed plan, Musk would receive 12 tranches of stock options tied to ambitious targets, including an $8.5 trillion market capitalization and major milestones in robotics and autonomous driving. Denholm emphasized that the package is necessary to align Musk’s incentives with long-term shareholder value and growth.
Tesla’s board has faced ongoing criticism over the years, with governance experts questioning its independence and oversight of Musk’s influence. Scrutiny intensified earlier this year when a Delaware court invalidated Musk’s 2018 pay deal, ruling it had been improperly awarded by directors deemed insufficiently independent.
Despite the boardroom tension and the pending vote, Tesla shares rose 3.1% in New York trading on Monday.
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