The Tesla board has warned that CEO Elon Musk will quit if shareholders don’t pass his US$1 trillion pay package.
In a letter to shareholders, chairperson of the Tesla board Robyn Denholm said the company was at a “critical inflection point” and added that losing Musk could lead to the carmaker losing “significant value”.
“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 in the letter.
“When negotiating this performance award, we necessarily considered what Tesla’s future without Elon would look like, and we did not believe it was the future that our shareholders deserve.”
The proposed compensation plan that shareholders will vote on could net Musk as much as US$1 trillion if he can hit a series of milestones, including taking Tesla to a US$8.5 trillion market cap by 2035.
The pay package is also contingent upon Tesla delivering a cumulative total of 20 million cars and one million Optimus robots over the next decade.
Other milestones Musk would need to reach include putting one million robotaxis on the road, boosting the number of subscribers to the company’s Tesla Full Self-Driving service by 10 million and lifting the company’s earnings before interest, taxes, depreciation, and amortisation to $400 billion over the next 10 years, up from $16.6 billion last year.
This plan would tie Musk to Tesla for at least the next decade.
The plan has received pushback as Proxy firms ISS and Glass Lewis both advised shareholders to vote against the package, causing Musk to call them "corporate terrorists" during Tesla's earnings call last week.
A group of unions and corporate watchdogs also launched the Take Back Tesla website last week to oppose the pay package, noting that Musk’s embracing of right-wing ideals and amplifying conspiracy theories could have on the brand.
Denholm wrote that Tesla would “give up its executive position” if it loses Musk and added that it will also lose value as a “transformative force” in the fields of AI and robotics.
"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," Denholm wrote.
The package would raise Musk’s stake in Tesla from 13% to nearly 29%.
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