Tesla chairwoman Robyn Denholm has stepped up her campaign to win shareholder support for Elon Musk’s $1 trillion (€859 billion) pay package, warning there is no “Elon mark 2” if the carmaker’s board is forced to try to replace the chief executive.
Ms Denholm and other Tesla board members are meeting this week with the company’s largest institutional investors, which include Vanguard, BlackRock and State Street, to lobby for the plan in advance of a vote on November 6th.
Mr Musk has threatened to walk out if shareholders vote down a new package of stock options that could be worth up to $1 trillion over the next decade.
Ms Denholm confirmed that Mr Musk’s public threats had also been communicated privately to the board, but refused to explain Tesla’s contingency plan if shareholders reject the pay deal. Ms Denholm has also written to shareholders warning of his potential departure if his package is not approved.
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“This is a vote for shareholders on the future of Tesla,” Ms Denholm told the Financial Times. “There’s just not anybody, either inside or outside the organisation, that is Elon today,” she said.
Mr Musk’s pay has been the centre of years of controversy and legal wrangling. Last year, shareholders voted in favour of a previous $56 billion pay deal. That package was originally awarded in 2018 but subsequently blocked by a Delaware court, which said the process lacked proper board oversight.
The new proposal is expected to face significant opposition after advisory groups Glass Lewis and ISS recommended that shareholders reject the proposals.
A group of big pension funds separately issued an open letter opposing the pay plan, claiming the board’s “relentless pursuit” of retaining its chief executive had damaged Tesla’s reputation and led to excessive compensation. On Monday, the head of the New York pension fund called the pay proposal “inflated and poorly designed” and urged investors to vote against it.
Mr Musk responded to the criticism on X, the social media site he owns, last week: “Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me.”
The fortune of the world’s richest man is largely tied up in the value of Tesla’s shares, which have more than tripled in value over the past five years as the carmaker’s market capitalisation soared to $1.4 trillion.
Asked what the board will do if Tesla loses the vote and cannot retain Mr Musk, Ms Denholm said: “I don’t want to foreshadow anything on that front at this moment, but clearly, as a board, we have discussed what happens and we know that it wouldn’t be a good outcome for shareholders.”
“If we don’t have Elon at the helm, or he isn’t as motivated or incentivised to actually create that future, then it’s actually a negative for all shareholders.”
She added that she did not believe Mr Musk would do anything “sudden and detrimental” if Tesla loses the vote.
Mr Musk has used large quantities of his Tesla shares as security to borrow billions of dollars to fund his other ventures, such as his acquisition of Twitter, now X, in 2022 and the development of his artificial intelligence start-up, xAI. He currently owns a 15 per cent stake in Tesla and is able to vote his shares in favour of the compensation plan.
Tesla has warned investors that Mr Musk’s leadership is crucial to a strategic pivot into AI, including through autonomous driving and its plans to build millions of humanoid “Optimus” robots.
Mr Musk has argued he needs to control at least a quarter of Tesla’s voting rights to stop its AI products falling into the wrong hands, using the example of him being ousted by activist investors.
Last week, Mr Musk branded Glass Lewis and ISS “corporate terrorists” and said: “I just don’t feel comfortable building a robot army and then being ousted because of some asinine recommendations from ISS and Glass Lewis who have no freaking clue.”
Ms Denholm told the FT that the special committee set up to design the pay package – which was made up of her and director Kathleen Wilson-Thompson – explored whether there was a way to give Mr Musk the voting rights he wanted without the vast payout.
“There wasn’t an instrument that you could use that could do that,” she said. “We searched high and low for it, but we ended up using restricted stock, which does have economic rights.”
The proposed $1 trillion compensation award includes 12 tranches of restricted stock that are each tied to ambitious milestones for its share price and operational performance.
It would grant Mr Musk an additional 12 per cent of Tesla’s shares if he increases its valuation to $8.5tn, boosts earnings 24-fold and sell millions more cars and robots. Achieving even half of those targets could make him the world’s first trillionaire.
Shareholders will also vote on a string of other proposals next week, including the reappointment of three directors and whether Tesla can invest in xAI. – Copyright The Financial Times Limited 2025
