Elon Musk may step down as Tesla's CEO if his proposed $1 trillion compensation package is not approved, the company's chair Robyn Denholm warned in a letter to shareholders on Monday. This was reported by Reuters, writes UNN.
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The call came ahead of the annual shareholders' meeting scheduled for November 6, amid ongoing criticism of Tesla's board of directors for actions that, according to corporate governance experts and advocacy groups, do not always serve the best interests of shareholders. Critics also question the board's independence and its ability to control Musk's influence.
In the letter, Denholm noted that the proposed performance-based compensation plan is designed to keep Musk as Tesla's leader for at least another seven and a half years and to motivate him to further develop the company.
She emphasized that Musk's leadership is critical to Tesla's success and warned that without a proper incentive plan, the company could lose his "time, talent, and vision." Musk, she said, plays a key role in Tesla's ambition to become a global leader in artificial intelligence and autonomous technologies.
Under the proposal, Musk will receive 12 tranches of stock options tied to achieving ambitious goals — including a market capitalization of $8.5 trillion, as well as success in autonomous driving and robotics.
In the letter, Denholm emphasized that this package is necessary to align Musk's interests with shareholder value and the company's long-term growth. She also urged investors to re-elect three long-standing board members who work closely with Musk.
Tesla's board of directors has been under scrutiny for several years due to its close ties with Musk. Earlier this year, a Delaware court invalidated his 2018 compensation agreement, concluding that it was improperly negotiated and approved by directors who were not fully independent.