Elon Musk could step down as Tesla’s CEO if shareholders fail to approve his proposed $1 trillion pay package, Chair Robyn Denholm cautioned in a letter to investors on Monday.
The warning comes ahead of Tesla’s annual meeting on November 6, as the board faces mounting criticism from governance experts and advocacy groups questioning its independence and oversight of Musk’s role at the company.
Denholm described the performance-based plan as crucial to retaining and motivating Musk to continue leading Tesla for at least another seven-and-a-half years. She emphasized that his leadership remains “critical” to Tesla’s success and warned that without a proper incentive structure, the company risked losing his “time, talent, and vision.”
The proposed package would give Musk 12 tranches of stock options tied to highly ambitious goals, including achieving a market capitalization of $8.5 trillion and hitting key milestones in autonomous driving and robotics.
Denholm framed the package as aligning Musk’s interests with long-term shareholder value, also urging investors to re-elect three veteran board members who have worked closely with him.
Tesla’s board has been under scrutiny for its close ties to Musk, especially after a Delaware court earlier this year voided his 2018 compensation plan, ruling that it had been improperly awarded by directors lacking full independence.
Musk, meanwhile, defended the proposal, saying it was necessary to safeguard Tesla’s future. “It’s not like I’m going to go spend the money,” Musk told investors during a recent call. “There needs to be enough voting control to give (me) a strong influence – but not so much that I can’t be fired if I go insane.”
He also lashed out at proxy advisory firms ISS and Glass Lewis, calling them “corporate terrorists” for advising shareholders to reject the plan. “I just don’t feel comfortable building a robot army here and … then being ousted because of some asinine recommendations from ISS and Glass Lewis, who have no freaking clue,” Musk said.
“They have made many terrible recommendations in the past that if those recommendations had been followed, it would have been extremely destructive to the future of the company.”
In addition to leading Tesla, Musk heads SpaceX and AI startup xAI, which owns the social media platform X.
Denholm reiterated in her letter that the new compensation plan was essential to keep Musk focused on Tesla’s long-term ambitions, particularly as the company races to dominate in artificial intelligence and autonomous technology.
(with agency inputs)
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