Elon Musk’s Future at Tesla Faces Uncertainty
The upcoming shareholder vote on Thursday could put Elon Musk’s future at Tesla in a precarious position. The vote will determine whether to approve a groundbreaking $1 trillion compensation package for Musk.
This contentious proposal is set to be discussed at Tesla’s annual meeting in Texas and ties Musk’s pay to various performance objectives. Critics, including major proxy advisory firms like ISS and Glass Lewis, argue that the proposed salary is excessively high. On the other hand, both Tesla Chairman Robin Denholm and Musk have indicated that they might consider leaving the company if shareholders reject the plan.
Denholm expressed concerns in a recent letter on X, stating that “Tesla may lose the time, talent, and vision that were essential to delivering exceptional shareholder returns.”
Musk has framed the stakes in dire terms, claiming that the future of civilization could be influenced by who controls Tesla, as he stated in an X post on October 29.
The billionaire insists that he needs more control over voting rights, particularly through equity subsidies, to effectively navigate Tesla’s future, especially in the realms of artificial intelligence, humanoid robots, and self-driving technology. If all goals are met, Musk could end up controlling nearly 29% of the voting stock.
The hefty compensation package was unveiled in a September filing after a Delaware judge overturned a prior $56 billion payment plan. The judge deemed that the earlier package, which had been approved in 2018, was problematic due to conflicts of interest.
Under the new proposal, Tesla would pay Musk a portion of his salary if it achieves a $2 trillion valuation and delivers 20 million vehicles. A pay tranche would also be awarded if the company reaches a $3 trillion valuation and delivers 1 million Optimus humanoid robots, prompting action from other companies.
Norway’s sovereign wealth fund, which is Tesla’s largest stakeholder, has expressed strong opposition to the new pay structure. Norges Bank Investment Management issued a statement highlighting their appreciation for Musk’s contributions while also raising concerns about the scale of the awards, potential dilution, and inadequate risk mitigation for key personnel.
Tesla’s stock saw a nearly 5% decline during trading on Tuesday.
Pope Leo XIV has pointed to Musk’s compensation as indicative of a troubling shift in societal values. In a September interview, he questioned the implications of Musk potentially becoming the world’s first trillionaire, expressing concern that valuing wealth above all else could spell trouble for society.
Both ISS and Glass Lewis have recommended shareholders vote against the proposal, emphasizing that the compensation could dilute others’ holdings.
Major retail investors in Tesla, including BlackRock, State Street, and Vanguard, have not yet disclosed their voting intentions.
As it stands, Wedbush analyst Dan Ives believes shareholders are likely to approve the plan, suggesting that this moment is critical for Tesla as the AI revolution brings autonomous driving and robotics into sharper focus.
Ives noted, “We expect shareholders to show overwhelming support for Musk and xAI stock, placing Tesla at the forefront as an AI leader focused on the future of autonomous robots.”
