Tesla CEO Elon Musk could leave the company if his proposed $1 trillion salary is not approved, the automaker’s Board Chair Robyn Denholm has warned.
Denholm appealed to shareholders in a letter published Monday, a little over a week before the company’s November 6 annual meeting, as the company’s board has come under fire for the level of control shareholders have given Musk.
The proposed plan was designed to retain and motivate Musk, the world’s richest man, for at least another seven-and-a-half years, Denholm wrote in the letter.
Denholm noted that Musk’s leadership was “critical” to Tesla’s success, and without a plan that will incentivize him, the company could lose his “time, talent and vision.”
“Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become,” she wrote.
Musk’s leadership is what keeps Tesla from being “just another car company,” as the EV maker’s focus turns to full self-driving vehicles and Optimus, also known as Tesla Bot, Denholm said.
The huge proposed package would give 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.
He could make up to $1 trillion over 10 years, so long as Tesla hits all its growth targets. His last deal, earning $56 billion in 2018, also broke records at the time.
In her letter, Denholm emphasizes that the package would be crucial to align Musk’s incentives with shareholder value and long-term growth. With it, she urged investors to re-elect three long-standing directors who have worked closely with Musk.
Tesla’s board has come under fierce criticism over its apparently 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.
Meanwhile, several groups have come out in opposition to the pay package, with Institutional Shareholder Services, the biggest proxy advisory firm in the world, urging investors to vote against some or all of it
Musk himself went off on a tirade about the criticism received over the proposed package during an earnings call last week, saying the advisory firms “have no freaking clue” and describing them as “corporate terrorists.”
Musk also suggested that, as things stand, they could potentially convince shareholders to remove him.
“My fundamental concern with regard to how much voting control I have at Tesla is, if I go ahead and build this enormous robot army, can I just be ousted at some point in the future?” he said, according to Wired.
“If we build this robot army, do I have at least a strong influence over this robot army?”
“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,” he is also reported to have said in the meeting.
As part of the proposed compensation package, Musk’s shareholdings in Tesla will rise from 13 per cent to almost 25 per cent, according to CNBC, handing him much more control over the company as it expands from EVs to include AI, robotaxis, and its Optimus humanoid robots.
“I just think that there needs to be enough voting control to give a strong influence, but not so much that I can’t be fired if I go insane,” he added during the call.
Online shareholder votes regarding Musk’s new salary and other proposals are due by or before 11:59 p.m. on November 5.
With reporting by Reuters.
