Tesla shareholders have just days left to vote on whether to approve a staggering pay package for CEO Elon Musk that could give him nearly $1 trillion in stock.
Musk may leave the company if shareholders reject the package, warned Chairman of the Board of Directors Robin Denholm in a letter voters last week. The salary proposal is linked to ambitious productivity targets and is needed to incentivize Musk to continue his work, Denholm said.
Tesla will hold its annual meeting on Thursday. Shareholders have until 11:59 pm ET on Wednesday to vote on the pay plan, which was announced by the board in September.
“If we cannot create an environment that motivates Elon to achieve great things through a fair pay-for-performance plan, we risk him resigning from his leadership position,” Denholm wrote in the Oct. 27 letter. “Tesla could lose the time, talent and vision that were needed to generate extraordinary returns for shareholders.”
Musk is already among the highest-paid executives in the world, with his salary eclipsing those of Meta's Mark Zuckerberg and Palantir's Alexander Karp. Musk is also Tesla's largest individual shareholder, with about 13% of the shares, but has repeatedly said he would like to have more voting power in the company.
In his earnings call last month, Musk said he wanted to take a significant stake in the company as he focuses on artificial intelligence and continues to develop his humanoid robot, dubbed Optimus.
“If we build this army of robotsDo I even have much influence over this army of robots?” Musk told analysts. “I don't feel comfortable creating this army of robots unless I have at least a strong influence.”
If approved, new payment plan will give Musk more than 25% of the company's shares to achieve certain goals. The first milestone is reaching Tesla's $2 trillion valuation, which is currently valued at around $1.5 trillion.
These milestones gradually increase to a company valuation of $8.5 trillion, and also include product goals such as shipping 20 million vehicles, deploying 1 million robotaxis for commercial operation, and obtaining 10 million subscriptions for full self-driving cars.
In her letter, Denholm described the package as “a highly customized performance plan that aligns shareholder value and measurable business results with the interests of our CEO.”
Tesla is at an inflection point as it bets on self-driving technology and becomes less reliant on its traditional electric vehicles after a year of faltering sales, experts say.
Interest in electric vehicles is waning as the Trump administration cracks down on federal incentives to switch to electric vehicles and announces high tariffs on cars. Last month, Tesla's quarterly profit fell 31% year-over-year.
Still, the company's shares are up 22% this year, even after Musk's stint in the White House sparked a brand crisis for Tesla. Shares rose more than 2% on Monday, days before the voting deadline.
Musk is important on Tesla's activities and its transformation into an artificial intelligence center, the board of directors said. According to them, the proposed payment plan is fair as it depends on the overall success of the company.
“Elon will only be rewarded if and when he demonstrates outstanding results that benefit all Tesla shareholders,” Denholm wrote in October.
A Reuters analysis found that Musk could make more than $50 billion by meeting just some of the board's less ambitious goals.
Musk is known for overpromising and has been exaggerating the capabilities of his autonomous technology for nearly a decade. He described driverless cars as a “solved problem” in 2015, although Tesla's 2025 robotaxi rollout in Austin, Texas has been difficult. with glitches.
The proposed payment plan could make Musk the world's first trillionaire. Several groups, including labor unions, corporate watchdogs and trusted consulting firms, have publicly opposed the pay package.
