Tesla Shareholders Warned: Elon Musk May Leave If $1 Trillion Compensation Package Fails

The proposed package would grant Musk 12 tranches of stock options tied to ambitious targets. (File)

Tesla Chair Robyn Denholm has warned shareholders that Elon Musk might step down as CEO if his proposed $1 trillion pay package fails to gain approval.

This urgent appeal comes before the November 6 annual meeting, as Tesla's board faces mounting criticism regarding shareholder interests. Governance experts and advocacy groups have repeatedly questioned the board's independence and its oversight of Musk's considerable influence.

According to Denholm's letter, the performance-based compensation plan was specifically designed to retain Musk as Tesla's leader for at least another seven-and-a-half years.

She emphasized that Musk's leadership remains "critical" to Tesla's continued success and cautioned that without proper incentives, the company risks losing his "time, talent and vision." His role is described as particularly vital as Tesla positions itself to become a global leader in artificial intelligence and autonomous technology.

The proposed compensation package would provide Musk with 12 tranches of stock options linked to ambitious targets, including achieving an $8.5 trillion market capitalization and reaching significant milestones in autonomous driving and robotics development.

Denholm's letter frames the package as essential for aligning Musk's incentives with shareholder value and long-term growth. She also urges investors to re-elect three long-serving directors who have collaborated closely with Musk.

Tesla's board has faced years of scrutiny regarding its close relationship with Musk. Earlier this year, a Delaware court invalidated his 2018 pay package, ruling it was improperly awarded and negotiated by directors who lacked true independence.