Elon Musk could leave Tesla as CEO if his proposed $1 trillion pay package were not approved, Chair Robyn Denholm warned in a letter to shareholders on Monday, Reuters reports.
The appeal comes ahead of the November 6 annual meeting, with Tesla’s board having faced repeated criticism for not acting in shareholders’ best interests. Governance experts and advocacy groups have questioned its independence and oversight of Musk’s influence.
The proposed performance-based plan was designed to retain and motivate Musk to continue leading Tesla for at least another seven-and-a-half years, Denholm said in the letter.
Musk’s leadership was “critical” to Tesla’s success, she said, and warned that without a plan that properly incentivizes him, the company could lose his “time, talent and vision”. Musk’s role was vital as Tesla sought to become a global leader in artificial intelligence and autonomous technology, she said.
The proposed package would grant Musk 12 tranches of stock options tied to ambitious targets, including a market capitalization of $8.5 trillion and milestones in autonomous driving and robotics.
Denholm’s letter portrays the package as necessary to align Musk’s incentives with shareholder value and long-term growth, also urging investors to re-elect three long-serving directors who have worked closely with him.
Tesla’s board has been under scrutiny for years over its close relationship with Musk. A Delaware court earlier this year struck down his 2018 pay deal, finding it was improperly awarded and negotiated by directors who were not fully independent.
