Tesla’s board chair, Robyn Denholm, has issued a stark warning to shareholders: if the company does not secure approval for CEO Elon Musk’s proposed performance-based compensation plan, the company may lose his leadership. The package, which could be worth up to US$ 1 trillion, is set for a vote at the company’s annual meeting on November 6th.
The plan grants Musk up to twelve tranches of stock options, contingent on ambitious targets including a market capitalisation of around US$ 8.5 trillion and significant milestones in robotics and autonomy over the next decade. According to the company filing, the compensation aligns Musk’s incentives with long-term shareholder value, rather than salary or bonus payments.
Denholm’s letter to shareholders frames the vote as a clear choice: whether they wish to retain Musk’s “time, talent and vision” at Tesla. She argued that failing to approve the deal could result in Musk redirecting his focus, a scenario she warned could place the company’s ambitions in AI, autonomous vehicles and robotics at risk. The governance dimension is also glaring: proxy advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis have recommended shareholders vote against the package, citing its dilutive impact and the board’s limited flexibility over future compensation decisions.
If Musk meets all targets and the compensation is earned, his effective stake and voting power in Tesla could increase noticeably, potentially increasing his ownership from roughly 13% to about 25-29% according to analysts. That outcome raises concerns among governance watchers that shareholder influence may be diminished just as Tesla’s strategic focus shifts more heavily into AI and robotics, areas where outcomes are highly uncertain.
Tesla is, in summary, asking its investors to endorse a monumental pay-for-performance package for Elon Musk, framed as essential for retaining his leadership and executing the next chapter of the business. But the vote also spotlights tensions between extreme growth ambitions, executive control, shareholder rights and board oversight. The outcome may say as much about evolving norms in corporate governance in the fintech and tech sectors as it does about the company’s future trajectory.
