Tesla Board Chair Urges Investor to Approve Elon Musk’s Pay Package

In Focus

• Tesla board chair has asked investors to approve Musk’s pay package
• Denholm says Musk might leave if the $1 trillion package is not approved
• Pay plan could double Musk’s stake in Tesla

Tesla’s board chair Robyn Denholm has appealed for approval of Elon Musk’s proposed pay package, Reuters reported. In a letter to shareholders, Denholm warned that Musk could quit as Tesla CEO if the proposed $1 trillion pay package is not approved. The package would expand Elon Musk’s return and stake in Tesla to 28.8%, up from 13%.

Musk’s Leadership Vital to Tesla Growth

Denholm said Musk’s leadership is critical for the EV maker to lead in AI and autonomous technology. She added that in the absence of a plan to incentivize him, Tesla might lose his “time, talent, and vision”.

“Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become,” Denholm wrote in the letter.

The Tesla board proposed a $1trillion dollar pay package for Musk in September 2025. The package features 12 tranches of shares to be issued to Musk only if Tesla achieves specific milestones over the next 10 years.

Tesla board chair warns of Musk’s departure at a time when the Tesla board has faced criticism for failing to act in the interest of shareholders.

When is the Vote on Musk’s Compensation at Tesla?

Tesla shareholders must vote for Musk’s package and other proposals by November 5, 2025. The board chair said the pay plan is intended to retain Musk for seven and half years.

It aligns Musk’s motivation with shareholder value and the company’s long-term growth. Denholm also encouraged shareholders to re-elect three long-service directors who work closely with him. Tesla released standard versions of Model 3 and Model Y vehicles.

For years now, the Tesla board has been criticized for its closeness to Musk. As the Tesla board warns that Musk may leave if the pay plan is rejected, lobby groups and influential proxy advisory firms have questioned its independence and oversight over the CEO’s influence.

Glass Lewis and Institutional Shareholder Services (ISS) expressed concerns over excessive dilution. Denholm accused advisory firms of misunderstanding Tesla’s strategy and asked investors to ignore their advice.

Elon Musk’s Tesla Stake at a Glance

• Denholm said Musk’s leadership is critical for EV maker
• Shareholders must vote for Musk’s package by November 5, 2025
• Tesla chair asked investors to re-elect three long-service directors

Balancing Performance with Shareholder Return

Egan-Jones Proxy Services has sided with Tesla’s board. The company promotes alignment between pay-for-performance and shareholder return.

“If Mr. Musk fails to meet the specified milestones, he will receive nothing. If he succeeds, both Mr. Musk and shareholders stand to benefit significantly,” the firm said.

While supporting Musk’s pay package, Egan-Jones Proxy Services warned that it could reduce shareholder influence. Musk triggered an 8% stock rise last month following a $1 billion share purchase.

The firm also notes that the pay package would expand pay disparities in Tesla, which will affect employee morale and create long-term risks. A Delaware court rejected his 2018 pay deal citing flaws in the award process.