Tesla Inc. Chair Robyn Denholm has emphasized the importance of approving CEO Elon Musk’s proposed $1 trillion pay package, warning that rejecting it could lead to Musk stepping down from his position. Denholm’s statement comes just days before Tesla’s annual meeting on November 6.
Musk’s Incentives Tied to Shareholder Value
Denholm’s letter to shareholders highlights the significance of Musk’s leadership and the potential consequences of not approving the proposed pay plan. The performance-linked compensation plan is designed to keep Musk in the role of Tesla CEO for at least another seven and a half years. Musk’s leadership is vital to Tesla’s future, especially as the company pushes to lead globally in artificial intelligence and autonomous technology.
Key Points of the Pay Package
- The proposed $1 trillion pay package includes 12 stock tranches tied to highly ambitious targets
- Targets include Tesla reaching an $8.5 trillion market cap, delivering 20 million vehicles, and deploying millions of robotaxis and AI robots over the next decade
Ongoing Scrutiny of the Pay Plan
Musk’s proposed pay package has faced scrutiny due to the board’s close ties to him. A court earlier this year voided his 2018 pay deal, ruling it was improperly approved by insufficiently independent directors. Proxy advisory firms have also opposed Musk’s new compensation award, terming their recommendations as “misguided.”
Support for Musk’s Pay Package
Despite opposition, Musk’s pay plan has received support from the State Board of Administration (SBA) of the Florida Retirement System (FRS), which owns over $1 billion in Tesla shares. The agency termed the compensation award a “bold, performance-driven incentive structure” in an SEC filing. Additionally, Jim Cramer has backed Elon Musk’s $1 trillion package, stating that he is “really smart” and “actually worth it.”
Conclusion
Denholm’s warning emphasizes the importance of approving Musk’s pay package to retain his leadership and ensure Tesla’s continued success. With the company’s annual meeting approaching, shareholders will have to weigh the pros and cons of the proposed package and make a decision that will impact the company’s future.