Tesla chair Robyn Denholm is trying hard to convince investors to back Elon Musk’s massive $1 trillion pay package, even warning that there’s simply no replacement for the billionaire CEO if shareholders vote it down and Musk chooses to walk away, Financial Times reported.
Earlier, Musk lashed out at shareholder proxy advisers Glass Lewis and ISS, calling them “corporate terrorists” after they asked investors to vote against his proposed $1 trillion (£750 billion) pay package.
‘There’s no Elon Musk 2,’ says Tesla chair
Denholm, along with other board members, is scheduled to meet some of Tesla’s biggest institutional investors this week, including Vanguard, BlackRock, and State Street, in efforts to gather support ahead of the November 6 vote. Musk has made it clear that he may leave if the board objects to the proposed option. The package could be worth up to $1 trillion over the next decade, depending on Tesla’s performance, according to the FT report.
When asked what Tesla’s backup plan might be if shareholders reject the deal, Denholm declined to go into details, but said it wouldn’t be a good outcome for shareholders. “I don’t want to foreshadow anything on that front, but clearly, as a board, we have discussed what happens and we know that it wouldn’t be a good outcome for shareholders.”
She continued, “This is a vote for shareholders on the future of Tesla,” Denholm told the Financial Times. “There’s just not anybody, either inside or outside the organisation, that is Elon today,” she said.
In 2023, shareholders had approved a $56 billion pay deal. But that package failed to pass a Delaware court, which found that Tesla’s board failed to exercise proper oversight. The new $1 trillion proposal is being opposed by big advisory firms Glass Lewis and ISS.
Under the proposed scheme, Musk could receive millions of Tesla shares if he succeeds in turning the electric carmaker from a $1 trillion company into one worth $8.5 trillion over the next decade.
Elon Musk’s response
After being criticised by influential advisory firms, the Tesla CEO, Musk, took to X to defend himself. “Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me,” he wrote.
A huge chunk of Musk’s wealth is connected to Tesla’s stock, which has more than tripled in value over the past five years. The company is currently valued at around $1.4 trillion.
Musk has used much of his Tesla stock as collateral to borrow billions for his other ventures. A good example for this is his 2022 purchase of Twitter (now X) and his AI start-up, xAI. He currently owns 15% of Tesla and will vote his shares in favour of the pay plan, according to Financial Times.
Musk argues he needs at least a 25% voting stake in Tesla to ensure that its AI projects don’t “fall into the wrong hands.”
“If we don’t have Elon at the helm, or he isn’t motivated or incentivised to create that future,” Denholm said, “then it’s a negative for all shareholders.”