Tesla CEO Elon Musk could step down if shareholders reject the company’s unprecedented $1 trillion performance-based pay package, warned Tesla Chairperson Robin Denholm in a Monday letter to investors.
Denholm emphasized that the package is structured to motivate Musk to lead Tesla for at least seven and a half more years. She described Musk’s leadership as pivotal to the company’s strategic growth, innovation, and global competitiveness, warning that without proper incentives, Tesla risks losing his “time, talent, and visionary guidance.”
The letter underlined Musk’s critical role as Tesla pushes to maintain global leadership in artificial intelligence (AI) and autonomous technology, including self-driving vehicles and advanced robotics.
The proposed package includes 12 tranches of stock options tied to ambitious milestones. These include achieving an $8.5 trillion market valuation, breakthroughs in autonomous vehicle technology, expansion of Tesla’s AI capabilities, and advancements in robotics manufacturing and applications. Analysts say this aligns Tesla’s executive incentives with long-term shareholder value and global innovation leadership.
Denholm also urged shareholders to approve the pay package and to re-elect three directors with a long history of working alongside Musk, ensuring stability and continuity in governance.
Historically, Musk’s compensation packages have faced legal scrutiny. In 2018, a Delaware court invalidated a previous pay package, ruling it had been improperly approved by non-independent directors. This vote now represents both a corporate governance test and a strategic decision for Tesla’s future leadership.