Musk Could Leave Company If $56 Billion Pay Package Isn't Approved: Chairperson of Tesla Warns Shareholders

Tesla’s board chair, Robyn Denholm, is urging the company’s shareholders to approve a massive $56 billion pay package for CEO Elon Musk, highlighting the potential risk of losing the influential leader if the compensation plan isn't endorsed. 

As shareholders prepare to vote on June 13th, Denholm emphasizes the unique nature of Musk's role and his indispensable impact on Tesla’s success.

The upcoming vote marks the second time shareholders will decide on Musk’s pay package, following a Delaware judge's decision to void the initial approval due to a flawed process. 

Tesla is now making a concerted effort to secure the necessary votes, also proposing to reincorporate the company in Texas to avoid Delaware court oversight.

In her letter to shareholders filed with the Securities and Exchange Commission, Denholm stresses Musk’s extraordinary contributions and the unconventional approach needed to motivate him. 

"Elon is not a typical executive, and Tesla is not a typical company," she writes. "Motivating someone like Elon requires something different."

Denholm implies that without the right incentives, Musk could shift his focus to other ventures. 

“Elon does not have unlimited time, nor does he face any shortage of ideas and other places he can make an incredible difference in the world,” Denholm states. 

“We want those ideas, that energy, and that time to be at Tesla, for the benefit of you, our owners. But that requires reciprocal respect.”

The proposed $56 billion pay package, potentially making Musk the highest-paid CEO in history, is about retaining his unparalleled drive and vision for Tesla. 

Denholm argues that the compensation isn’t about the money, as Musk is already one of the wealthiest individuals globally. 

"We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018."

Musk’s extensive involvement in other high-profile projects like SpaceX, The Boring Company, Neuralink, X, and xAI has raised concerns about his attention to Tesla. 

Denholm’s letter reflects the fear among investors about Musk’s potential departure and emphasizes the need to secure his continued commitment to Tesla.

Despite several proxy firms advising against the pay proposal, early voting trends suggest strong support for Musk’s package, with about 25 percent of Tesla’s shares already cast and over 80 percent in favor, according to a report by trading platform eToro.

Musk, who currently holds around 13 percent of Tesla after selling shares to acquire Twitter, is also seeking more control over the company to advance his goals in artificial intelligence and self-driving cars. 

He has even hinted at spinning off Tesla’s AI division into a separate entity if his compensation demands aren’t met.

Denholm’s letter warns shareholders of the potential consequences of not honoring their commitment to Musk. 

“Elon honored his commitment and produced tremendous value for our stockholders. Honoring our commitment to Elon demonstrates that we support his vision for Tesla and recognize his extraordinary accomplishments — this is what will motivate him to continue to create value for stockholders.”

The June 13th vote will be a critical moment for Tesla, determining whether Musk will remain motivated to lead the company or potentially move on to other ventures, leaving a significant void at the helm of one of the world’s most innovative companies.