Tesla CEO Elon Musk could leave if $56 billion pay package isn’t approved, shareholders warn

Tesla Chairman Robyn Denholm is urging the company’s shareholders to approve Elon Musk’s massive $56 billion pay package or risk moving the billionaire CEO to greener pastures.

On June 13, Tesla shareholders will decide the fate of Musk’s compensation package, which is estimated at up to US$56 billion. It will be the second time shareholders have voted on CEO compensation, after a Delaware judge overturned the first earlier this year, saying the approval process was “deeply flawed.” And now the company is involved in a legal push to convince shareholders to approve the proposal a second time.

Later, she insinuates that Musk could flee to “other places” without proper motivation. “What we recognized in 2018 and continue to recognize today is that one thing Elon certainly doesn’t have is unlimited time,” says Denholm. “He also faces no shortage of ideas and other places where he can make an incredible difference in the world. We want these ideas, this energy and this time to be at Tesla, for the benefit of you, our owners. But this requires reciprocal respect.”

The vote to approve the $56 billion salary package, which would make Musk the highest-paid chief executive in modern history, is “not about money,” Denholm insists. “We all know that Elon is one of the richest people on the planet, and he would remain that way even if Tesla reneged on the commitment we made in 2018.”

Denholm’s suggestion that Musk needs “motivation” in the form of the biggest pay package ever approved for a CEO to stay at Tesla speaks to the fear many investors feel about his future at the company. Musk’s many different projects – leading companies such as SpaceX, The Boring Company, Neuralink, X and xAI – have diverted his attention from Tesla, which is the main source of his wealth and popularity.

Several proxy firms recommended not approving Musk’s salary proposal. But early voting seems to suggest he could end up getting what he wants. A report from trading platform eToro last month showed that about 25% of Tesla shares have already voted, Reuters he said. Of these, more than 80% were in favor of Musk’s package.

Still, Musk seeks more control over Tesla, in form of a 25 percent stake, in order to achieve its goals of developing artificial intelligence and autonomous cars. (He currently owns about 13% of the company after selling billions of dollars in stock to acquire Twitter.) At X, he threatened to spin off Tesla’s AI work into a separate company if his demands aren’t met.

And now shareholders are being warned – in a letter filled with innuendo – that he could simply leave Tesla if his payment isn’t approved.

“We all made a commitment to Elon,” writes Denholm. “Elon has honored his commitment and delivered tremendous value for our shareholders. Honoring our commitment to Elon demonstrates that we support his vision for Tesla and recognize his extraordinary achievements – this is what will motivate him to continue creating value for shareholders.”