Tesla’s board has warned that CEO Elon Musk could step down if his proposed $1 trillion pay package fails to win shareholder approval at the upcoming annual meeting.
The warning, according to Reuters, was issued in a letter from chair Robyn Denholm.
It marks a turning point for the world’s most valuable electric carmaker, which now faces pressure to defend both its corporate governance and its fast-growing artificial intelligence ambitions.
The outcome of the vote on November 6 could determine not only Musk’s future but also Tesla’s ability to retain its competitive edge in autonomous technology.
Tesla board defends $1 trillion performance-based package
Denholm’s letter described Musk’s leadership as “critical” to Tesla’s continued success, states Reuters, emphasising that the proposed pay structure is designed to keep him leading the company for another seven-and-a-half years.
The performance-based plan includes 12 tranches of stock options tied to strict milestones, including achieving an $8.5 trillion market capitalisation and progress in autonomous driving and robotics.
According to Denholm, the package aligns Musk’s incentives with shareholder value and long-term growth, ensuring Tesla remains under the guidance of the executive who transformed it into a global EV leader.
Without such incentives, she warned, the company risked losing Musk’s “time, talent, and vision” — a prospect that could unsettle investors as Tesla pursues its next phase of innovation.
Governance concerns put board under scrutiny
The appeal to shareholders comes as Tesla’s board faces mounting criticism over its independence and oversight of Musk’s influence.
Corporate governance experts and investor advocacy groups have questioned whether Tesla’s directors can act objectively when negotiating with the CEO, who remains its largest and most dominant shareholder.
Earlier this year, a Delaware court struck down Musk’s 2018 pay deal, ruling it had been improperly awarded and negotiated by directors who were not fully independent.
That decision has put additional pressure on Tesla to demonstrate stronger governance structures and transparent decision-making processes.
Denholm’s latest letter also urges shareholders to re-elect three long-serving directors who have worked closely with Musk, raising further debate over whether the board can balance loyalty with accountability as it seeks to retain investor confidence.
AI and automation projects face uncertainty
Beyond the pay debate, the potential loss of Musk could have far-reaching consequences for Tesla’s technological roadmap. The company’s growth strategy depends heavily on Musk’s leadership in artificial intelligence, robotics, and autonomous driving.
His personal involvement has been pivotal to advancing Tesla’s self-driving capabilities and developing new technologies such as the Optimus humanoid robot.
Denholm argued that a properly structured pay plan would ensure Musk remains committed to Tesla’s long-term AI goals.
Without that assurance, investors fear delays or disruptions to the company’s ambitious projects in machine learning and automation — areas Musk has said could eventually be worth more than Tesla’s vehicle business.
The timing is especially crucial as Tesla faces increasing competition from both traditional automakers and tech companies accelerating their own AI and EV initiatives.
Losing Musk’s direct leadership could slow the company’s momentum at a critical juncture, potentially eroding its advantage in the race toward full autonomy.
Shareholder vote could define Tesla’s next decade
As the November 6 vote approaches, Tesla’s future direction hinges on whether shareholders back the $1 trillion plan.
Denholm framed the deal not as a reward but as a retention strategy designed to safeguard Tesla’s global leadership in innovation.
The result of the vote will also serve as a referendum on how much influence Musk should continue to wield within the company.
Approving the plan would likely secure his leadership for another decade, while rejection could trigger major shifts in Tesla’s executive structure and strategy.
For now, Tesla remains caught between two imperatives — restoring trust in its governance and preserving the vision that has driven its rapid rise.
The board’s challenge is to convince shareholders that both can coexist as it navigates one of the most consequential decisions in its history.
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