Tesla shareholders have limited time to vote on approving a staggering pay package for CEO Elon Musk that could give him nearly $1 trillion in stock.
Musk could leave the company if shareholders reject the package, board chairman Robyn Denholm warned in a letter to voters last week. The pay proposal is tied to ambitious performance goals and is necessary to incentivize Musk to continue his work, Denholm said.
Tesla will hold its annual meeting on Thursday. Shareholders have until 11:59 p.m. ET on Wednesday to vote on the payout plan, which was revealed by the board in September.
“If we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we risk having him resign from his executive position,” Denholm wrote in an Oct. 27 letter. “Tesla stands to lose its time, talent and vision, which have been essential to generating extraordinary returns for shareholders.”
Norges Bank Investment Management, which manages Norway's natural resource revenues and is one of Tesla's largest investors, said Tuesday it will vote against Musk's proposed salary. The fund owns a 1.16% stake in the company.
“While we appreciate the significant value created under Mr. Musk's visionary role, we are concerned about the overall size of the award,” Norges bank said in a statement. “We will continue to seek constructive dialogue with Tesla on this and other issues.”
Musk is already among the highest-paid executives in the world, with compensation that dwarfs that of Meta's Mark Zuckerberg and Palantir's Alexander Karp. Musk is also Tesla's largest individual shareholder with about 13% of the shares, but has repeatedly said he would like more voting power over the company.
In an earnings call last month, Musk said he wants a significant stake in the company as it pivots toward artificial intelligence and continues to develop its humanoid robot, called Optimus.
“If we build this robot army, do I at least have a strong influence on that robot army?” Musk told analysts. “I don't feel comfortable building that robot army if I don't have at least a strong influence.”
If approved, the new pay plan would give Musk more than a 25% stake in the company to meet specific goals. The first milestone is reaching a $2 trillion valuation for Tesla, which is currently valued at around $1.5 trillion.
The milestones gradually increase to a company valuation of $8.5 billion and also include product goals such as delivering 20 million vehicles, deploying 1 million robotaxis for commercial operations, and obtaining 10 million fully self-driving subscriptions.
In his letter, Denholm described the package as “a highly customized performance plan that aligns shareholder value and measurable business results with the interests of our CEO.”
Tesla is at an inflection point as it bets its future on self-driving technology and becomes less reliant on its traditional electric vehicles after a year of rocky sales, experts said.
Interest in electric vehicles has been waning as the Trump administration criticizes federal incentives to go electric and declares high tariffs on cars. Last month, Tesla's quarterly earnings fell 31% year over year.
Still, the company's shares have risen more than 90% in the past 12 months, even after Musk sparked a crisis for the Tesla brand with his temporary stint in the White House. Shares rose more than 2% on Monday, days before the voting deadline.
Musk is essential to Tesla's operations and its transition to an artificial intelligence powerhouse, the board of directors said. The proposed payment plan is fair because it depends on the overall success of the company, they said.
“Elon is rewarded only if he delivers extraordinary performance that benefits all Tesla shareholders,” Denholm wrote in October.
A Reuters analysis found that Musk could pocket more than $50 billion by meeting just some of the board's less ambitious performance goals.
Musk is known to overpromise and has been hyping the capabilities of his autonomous technology for nearly a decade. He described autonomous vehicles as a “solved problem” in 2015, although Tesla's 2025 launch of robotaxis in Austin, Texas, ran into technical problems.
The proposed salary plan could make Musk the world's first billionaire. Several groups, including unions, business watchdogs and proxy advisory firms, have publicly opposed the pay package.
