Tesla Inc. (NASDAQ:TSLA) Chair Robyn Denholm has cautioned that CEO Elon Musk might step down if the board rejects his proposed $1 trillion pay package.
Musk’s Incentives Tied To Shareholder Values
Denholm, in a letter to shareholders on Monday, stressed the significance of Musk’s leadership and the potential consequences of not approving the proposed pay plan. The letter was issued just days before Tesla’s annual meeting on Nov. 6.
The performance-linked compensation plan is designed to keep Musk in the role of Tesla CEO for at least another seven and a half years. Denholm emphasized that Musk's leadership is vital to Tesla's future, especially as the company pushes to lead globally in artificial intelligence and autonomous technology.
If shareholders reject the pay package and "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," she wrote.
Denholm stressed Musk’s leadership as “critical” to Tesla’s success and warned that without a plan that adequately incentivizes Musk, Tesla could lose his “time, talent, and vision”.
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Ongoing Scrutiny Of The Pay Plan
Musk's proposed $1 trillion pay package includes 12 stock tranches tied to highly ambitious targets — including Tesla reaching an $8.5 trillion market cap, delivering 20 million vehicles, and deploying millions of robotaxis and AI robots over the next decade.
The board's close ties to Musk have long drawn scrutiny, and a Delaware court earlier this year voided his 2018 pay deal, ruling it was improperly approved by insufficiently independent directors.
Support For Musk’s Pay Package
Earlier, Denholm had criticized proxy advisory firms like International Shareholder Services (ISS) and Glass Lewis for opposing Musk’s new compensation award, terming their recommendations as “misguided.”
Musk also voiced his concerns over the opposition from proxy advisory firms, during Tesla’s earnings call, labeling them as “corporate terrorists” and accusing them of voting on “random political lines.”
However, Musk’s pay plan has received support from the State Board of Administration (SBA) of the Florida Retirement System (FRS), which owns over $1 billion in Tesla shares. The agency termed the compensation award a “bold, performance-driven incentive structure” in an SEC filing.
Benzinga's Edge Rankings place Tesla in the 74th percentile for quality and the 87th percentile for momentum, reflecting its strong performance in both areas. Check the detailed report here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
