According to Business Insider, Tesla shareholders are preparing to vote on Elon Musk’s potentially $1 trillion pay package at the company’s November 6 annual meeting. The proposal comes after a Delaware judge struck down Musk’s previous $56 billion compensation plan twice, with Tesla’s board now warning that Musk might walk away if the new package isn’t approved. To unlock the full payout, Musk must hit staggering targets including raising Tesla’s market cap to $8.5 trillion by 2035 and selling 12 million vehicles annually. Meanwhile, Tesla’s board rejected at least 11 shareholder proposals focused on accountability and is recommending against all governance measures. Proxy advisory firms ISS and Glass Lewis are urging shareholders to reject Musk’s compensation, calling it excessive with insufficient oversight.
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<h2 id="musk-ultimatum”>The Musk Ultimatum
Here’s the thing that really stands out: Tesla Chair Robyn Denholm basically told shareholders they need to approve this package or risk Musk walking away. That’s some serious pressure. And it’s happening while Musk remains without compensation as Tesla continues appealing the Delaware court decision. The whole situation feels like a high-stakes poker game where Musk is holding all the cards. I mean, can you imagine Tesla without Elon Musk? That’s exactly what the board is suggesting could happen.
The AI Ambitions
Now let’s talk about what Musk actually has to deliver. We’re not just talking about selling more cars here. The targets include deploying one million robotaxis and producing one million “AI bots.” That’s some serious sci-fi stuff. But here’s where it gets really interesting: Musk also wants shareholders to approve an investment in his AI startup xAI. This company was founded just last July and is already valued at about $50 billion. Musk previously said on X that Tesla “would have invested in xAI long ago” if it were up to him. So basically, he’s asking shareholders to fund his other ventures while giving him this massive pay package.
The Governance Battle
Meanwhile, Tesla’s board is fighting accountability measures tooth and nail. They rejected multiple shareholder proposals, including one from New York State Comptroller Thomas P. DiNapoli that challenged Tesla’s move to limit derivative lawsuits to largest shareholders. DiNapoli called Tesla’s actions a violation of “basic tenets of good corporate governance.” And proxy firms aren’t holding back either – ISS and Glass Lewis both recommend voting against Musk’s pay package. Musk fired back by calling these firms “corporate terrorists” during an earnings call. The whole situation reveals how thin the line is between visionary leadership and concerning concentration of power.
The Shareholder Dilemma
So what’s an investor supposed to do here? On one hand, Musk has delivered incredible returns for long-term shareholders. Tesla becoming the first company to hit an $8.5 trillion market cap would make early investors incredibly wealthy. But on the other hand, there are legitimate concerns about the “Muskonomy” – his web of interconnected companies where Tesla could become the funding source for his other ventures. Kevin Thomas from Shareholder Association for Research and Education put it perfectly: letting a CEO use a public company as a “piggy bank for cash, talent, and chips for his own, privately-held companies” sets a dangerous precedent. The vote essentially comes down to whether shareholders believe Musk’s vision is worth the risk of diminished oversight and potential conflicts of interest.
