Pay Musk $1tn or he could leave Tesla, warns chairman

Tesla has been targeted by a boycott because of Elon Musk’s support for Donald Trump - Kevin Dietsch/Getty

Elon Musk may leave Tesla if shareholders do not vote through his $1tn (£750bn) pay package, the company’s chairman has warned.

Robyn Denholm stressed that Tesla was at a “critical inflection point” ahead of a vote to approve the co-founder’s pay plan next week, which could make him the first trillionaire in history.

In an open letter, she wrote: “If we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision, which have been essential to delivering extraordinary shareholder returns.

“Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become.”

Tesla last month unveiled a new pay award scheme that would hand its chief executive $1tn if he succeeds in hitting a string of ambitious targets, including increasing the company’s valuation from $1tn to $8.5tn over the next decade.

Other goals include selling one million AI robots and deploying one million self-driving robotaxis on the road by 2035.

However, the proposed pay packet has been met with opposition from shareholder advisory groups Glass Lewis and ISS, which both urged investors to vote against it.

Glass Lewis warned that the plans should “warrant significant concern” as they would dilute other shareholders’ stakes while potentially handing Mr Musk a “materially increased ownership stake”.

The intervention triggered a furious response from Mr Musk, who branded the advisory groups “corporate terrorists” who had “no freaking clue”. With a net fortune of just under $500bn, he is already the richest person in the world.

Tesla has been battling a slowdown in sales in recent years as it battles competition from cut-price Chinese rivals, while the company has also been hit by a boycott over its chief executive’s support for Donald Trump.

Some investors have also raised concerns that Mr Musk has become too distracted by his other ventures, such as X and SpaceX.

However, Ms Denholm played down these concerns, praising the tycoon’s ability to “stretch his capacity beyond normal limits”.

She added: “I feel strongly – as do the rest of my colleagues on our board – that Elon singularly possesses the leadership characteristics and technical manufacturing know-how to keep us on the path towards maximising long-term shareholder value as well as social good.”

Mr Musk’s pay has long been a source of controversy at Tesla. The billionaire does not receive a salary or bonus but is instead rewarded through tailor-made pay schemes.

Story Continues

If approved, the $1tn pay package would be unprecedented and would eclipse his last award of $56bn in 2018, which was itself the largest ever.

However, Tesla is still fighting to have that pay award reinstated after it was struck down by a US judge for being excessively large for a second time last year.

View Comments