This Thursday, Tesla shareholders will cast a vote on what is far more than a simple compensation plan.
They face a stark and historic choice, a high-stakes referendum on the very nature of corporate power in the age of the celebrity founder: pay Elon Musk an unprecedented sum that could reach $878 billion, or risk the visionary leader walking away, potentially taking the company’s colossal market value with him.
The board of directors has pushed all its chips in, framing the decision as an existential one.
For them, and for many loyal investors, only Musk can deliver on the audacious promises that underpin Tesla’s valuation—a future of self-driving robotaxis and humanoid robots.
But for a growing chorus of governance experts and major institutional funds, the proposal represents a dangerous capitulation, a sign that the world’s richest man is holding the company he built “over the barrel.”
The board’s high-stakes ultimatum
The message from Tesla’s board, led by chair Robyn Denholm, is unambiguous: losing Elon Musk is not an option.
During negotiations, Musk reportedly told board members he might prioritise his other ventures—SpaceX, xAI, Neuralink—unless his compensation demands were met.
The board has taken this threat to heart, repeatedly emphasising the risk to shareholders.
Denholm’s position was made explicit in an October 27 letter.
She wrote:
Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become.
The board sought to ensure Musk’s long-term commitment with provisions like extended stock vesting periods, but the core of their argument is a gamble on a single individual.
From a purely economic standpoint, their position is understandable, said David Larcker, director of the Corporate Governance Research Initiative at Stanford University’s business school.
“If you think that Musk would potentially leave and the Tesla stock would crater, that’s not something you want to have happen on your watch,” he said.
An unprecedented payout for unprecedented goals
The numbers involved are, by any traditional measure, astronomical. If Musk achieves all performance milestones over the next decade, Tesla’s market value would have to swell to an incredible $8.5 trillion.
In that scenario, Musk would own roughly a quarter of the company. Even if he falls far short of those targets, he is still positioned to collect record payouts in the tens of billions.
For many investors, the potential reward far outweighs the sticker shock. They see the proposal as a powerful alignment of interests.
Despite this, the proposal has triggered a fierce backlash from governance watchdogs and major shareholders.
They argue the package is not just excessive in size but also a dangerous deviation from responsible corporate management, effectively cementing one man’s unchecked power over the company.
Major investors, including the nation’s largest public pension fund, the California Public Employees’ Retirement System (CalPERS), and Norway’s sovereign wealth fund, have publicly opposed the plan.
Norges Bank Investment Management stated the proposal could dilute shareholder value and failed to mitigate the profound “key person risk” of staking Tesla’s entire future on Musk.
“To me the appropriate answer is to say, ‘Have a good day,’” said Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, describing the board to Reuters as being “held over the barrel by a ‘superstar CEO.’”
A legal shift to Texas
The vote is further complicated by a recent legal maneuver.
Musk’s 2018 pay package—originally valued at $56 billion—was voided by a Delaware judge who called it an “unfathomable sum” negotiated by a conflicted board. In response, Tesla has reincorporated in Texas.
The move is significant: Texas law makes it harder for shareholders to sue, and it may allow Musk, with his 15% stake, to vote his own shares on the proposal—a potentially decisive advantage he did not have in Delaware.
For now, the greatest threat to the board is not a lawsuit, but Musk himself.
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