Tesla's board chair, Robyn Denholm, has issued a warning to shareholders. She stated that if Elon Musk's $1 trillion performance-based compensation package is rejected, the company risks losing its CEO. The vote is scheduled for Tesla's annual meeting on November 6. Therefore, this unprecedented pay plan could determine Musk's continued leadership.
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The Proposed Pay Package
The compensation plan is based on Musk achieving ambitious milestones over ten years. These include:
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Increasing Tesla's market capitalization from $1.38 trillion to $8.5 trillion.
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Deploying 1 million humanoid robots.
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Selling 20 million vehicles annually.
In return, Musk could receive up to 423 million Tesla shares. This may increase his stake from 13% to 29%. Consequently, his control over the company would grow.
Chair Denholm's Urgent Appeal
Denholm emphasized that Musk's leadership is “critical” to Tesla's future. Moreover, the company is expanding into artificial intelligence and autonomous technology. She warned that without proper incentives, Tesla might lose Musk's “time, talent, and vision.” These have been essential for the company's success.
Criticism and Legal Challenges
The proposed package has faced criticism. Institutional Shareholder Services (ISS) has advised investors to vote against it. They are concerned about its size and lack of binding elements. Additionally, a Delaware court previously voided Musk's 2018 compensation deal. The ruling raised questions about board independence and governance practices.
The Stakes for Tesla
The vote on Musk's compensation package is approaching. If rejected, Musk could leave, affecting Tesla's strategic direction. Conversely, approval could solidify Musk's vision for the company. It may also drive advancements in electric vehicles and AI technology. Therefore, all eyes are on shareholders to decide Tesla's future.
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