Tesla’s board of directors has issued a stark warning to shareholders, cautioning that CEO Elon Musk could walk away from the company if they fail to approve his proposed $1 trillion compensation plan.
In a letter sent to shareholders on Monday, Tesla Chair Robyn Denholm said the electric carmaker was at a “critical inflection point” and that rejecting the package would jeopardize Tesla’s leadership in artificial intelligence and robotics.
“The fundamental question for shareholders at this year’s Annual Meeting is simple: Do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?” Denholm wrote.
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The proposed compensation package, which will be voted on at Tesla’s annual meeting next week, was reintroduced last month after a Delaware judge struck down Musk’s previous record-setting pay deal earlier this year.
Under the new plan, Musk could earn up to $1 trillion over the next decade if he meets a series of steep performance targets. These include boosting Tesla’s market capitalization to $8.5 trillion by 2035 and shipping 1 million Optimus humanoid robots, part of the company’s ambitious push into AI-powered manufacturing and robotics.
If approved, the deal would nearly double Musk’s ownership stake in Tesla from about 13% to nearly 29%, solidifying his control over the company’s direction.
Pushback From Proxy Firms
The plan has drawn sharp criticism from two major proxy advisory firms, ISS and Glass Lewis, which urged shareholders to vote against it, arguing that the payout is excessive and poorly aligned with shareholder interests.
Musk, in response, blasted the firms during Tesla’s latest earnings call, calling them “corporate terrorists.” He warned that their influence could derail Tesla’s long-term vision.
“I just don’t feel comfortable building a robot army here and then being ousted because of some asinine recommendations from ISS and Glass Lewis,” Musk said.
Denholm defended the plan as necessary to retain Musk, who she described as the “driving force” behind Tesla’s innovation in electric vehicles, energy storage, and AI-driven automation.
“Musk may give up his executive position if Tesla fails to adequately compensate him,” Denholm wrote, warning that his departure could cause the company to “lose value as a transformative force.”
She added, “While there may be nothing wrong with being just another car company, our Board believes that Tesla can be more, that our shareholders deserve more, and that Elon is the right leader to help us achieve our full potential.”
In an interview with CNBC on Monday, Denholm clarified that Musk’s main concern is not personal wealth but ensuring he retains “enough influence over the vote at Tesla in the future so that bad things can’t happen with the AI.”
What’s at Stake?
The company’s stock has been volatile in recent months amid concerns over slowing demand for EVs and intensifying competition from Chinese automakers. At the same time, Musk has been shifting Tesla’s focus from cars to robotics and AI infrastructure — a transition that could redefine the company’s business model over the next decade.
Analysts say that if the pay package fails and Musk follows through on his threat to reduce his involvement, investor confidence could take a severe hit. The billionaire also runs SpaceX, X (formerly Twitter), Neuralink, and xAI — ventures that could easily absorb more of his attention if his commitment to Tesla wanes.
Tesla’s board is framing the upcoming shareholder vote as a referendum not just on Musk’s pay, but on the company’s entire strategic direction. Many believed that Tesla’s future — whether it remains a car company or becomes the world’s leading AI and robotics platform — depends on keeping Elon engaged.
The shareholder vote will take place next week, marking one of the most consequential moments for Tesla since its founding.