Tesla’s board chair has warned shareholders in a letter that failing to approve Elon Musk’s $1 trillion pay package could put the company at risk of losing its CEO and "significant value."
"Do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?" board Chair Robyn Denholm said in a letter to shareholders, calling the vote slated to take place during Tesla’s Annual Meeting on Nov. 6 "critical" for the future of the company and for delivering extraordinary shareholder returns.
Tesla's board of directors initially proposed the new compensation plan for Musk in September. It could be worth a potential $1 trillion, marking what would be the largest pay package for an executive in history. However, it is dependent upon certain ambitious targets being reached.
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The board's proposal would give Musk up to about 12% of Tesla's stock, worth about $1 trillion, if the automaker notches a market capitalization of $8.5 trillion and other operational milestones over a 10-year period. The company's current market value is just north of $1.4 trillion.
"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 added.
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Denholm argued that the "company may no longer be valued for what we aim to become: a transformative force reimagining the fundamental building blocks of mobility, energy and labor, with products such as FSD and Optimus, and working to better humanity in the process."
The message echoes Denholm’s previous letter to investors, in which she lamented "retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history."
Musk interjected at the end of the company's most recent earnings call to explain to investors that approving this package isn't necessarily about the money but about having enough power at the helm.
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Musk told shareholders last week that he is looking to have enough voting control "to give a strong influence, but not so much that I can't be fired if I go insane."
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Since Tesla is a public company, Musk said there is no way to increase his voting control because rules prevent creating special "super-voting" shares or changing ownership structures after an IPO.
