Elon Musk could step down as Tesla’s CEO if shareholders reject his proposed $1 trillion pay package, Tesla Board Chair Robyn Denholm warned in a letter to investors on Monday, October 27. The message comes ahead of the company’s annual meeting on November 6, when shareholders will vote on the record-breaking compensation plan.
The warning follows opposition from two influential proxy advisory firms, Glass Lewis and Institutional Shareholder Services (ISS), which have both recommended that investors vote against the proposal. These firms wield considerable influence, particularly among large institutional and passive fund investors with significant Tesla holdings.
Denholm said the pay package is intended to retain and motivate Musk, urging that his leadership is “critical” to Tesla’s long-term success. She cautioned that without appropriate incentives, the company risks losing Musk’s “time, talent, and vision” at a crucial moment, as Tesla seeks to lead in artificial intelligence and autonomous vehicle technology.
Under the proposal, Musk would receive 12 tranches of stock options tied to highly ambitious performance milestones, including achieving an $8.5 trillion market capitalization and major advances in robotics and self-driving capabilities.
Denholm defended the plan as essential for aligning Musk’s interests with long-term shareholder value and growth.
Tesla’s board has faced years of criticism from governance experts who question its independence and oversight of Musk’s influence. That scrutiny intensified earlier this year after a Delaware court struck down Musk’s 2018 pay deal, ruling it had been improperly awarded and negotiated by directors not considered fully independent.
Despite the controversy and upcoming vote, Tesla shares rose 3.1% in New York trading on Monday.
