Tesla looks at internal CEO candidate if Musk leaves over pay package vote

Electric carmaker Tesla is planning to name a new chief executive officer (CEO) if founder Elon Musk's proposed $1 trillion pay package is rejected and he steps down, Bloomberg reported.

 

Robyn Denholm, chair of Tesla's board, said to ensure an “orderly transition, the most likely would be internal". However, Denholm has not ruled out the possibility of external candidates.

 

According to the report, while Musk has been inextricably linked to Tesla for over a decade, the prospect of his departure comes ahead of the shareholders' vote scheduled to take place next week.

 

Musk's $1 trillion pay package vote

 

The compensation plan could give Musk a 25 per cent stake in Tesla if he substantially increases the company’s market value and meets growth targets in its car, robotics, and robotaxi divisions. If he does not receive his desired pay package and greater voting control, he has warned that he may step down or focus more on xAI, SpaceX, and his other ventures.

 

"I’ve had the conversations with him directly," said Denholm on Musk's warning to leave if his proposed pay package isn't approved. "There’s no question in my mind that if we don’t get this across, there is a high probability."

 

Denholm's remarks came amid the backdrop of media interviews and investor meetings aimed at rallying support for the record pay package, which will be put to a vote at Tesla’s annual meeting on November 6.

 

Although the vote is expected to pass, Chair Robyn Denholm noted that many investors tend to decide at the last moment, and the company cannot assume the outcome. With retail investors accounting for nearly 30 per cent of Tesla’s shareholder base, the usually reserved company has launched a campaign to encourage them to vote.

 

Denholm, along with other board members, such as James Murdoch and former Chipotle CFO Jack Hartung, has been holding meetings with many of Tesla's largest institutional shareholders, including Vanguard Group, BlackRock Inc, and State Street Corp. According to the report, many investors follow recommendations from proxy advisory firms like ISS and Glass Lewis, both of which advised voting against the pay package.

 

Tesla's chair said that while there is no guarantee of anything, there is a large group of passive investors who follow the advice of these proxy firms, and therefore, the company has to engage with them directly.

 

Tesla places Optimus humanoid robot in New York

 

To drum up further support, the electric carmaker placed its Optimus humanoid robot outside the Nasdaq stock exchange in New York, where it passed out candies to fans and onlookers. This episode highlighted the importance of keeping Musk actively engaged with Tesla, a goal central to the proposed compensation package.

 

The company aims to ensure that advancements in artificial intelligence and other new technologies are developed within Tesla rather than through other ventures of Musk.

 

Plan B if Musk's pay package vote fails

 

According to Denholm, if the proposal fails, the company claims to have a "Plan B", adding that the carmaker has a strong leadership bench, including global production chief and China head Tom Zhu, among others. Zhu has held several roles across Tesla, as part of an intentional strategy to cultivate internal talent.

 

Denholm also mentioned that “a whole range of alternatives” exists, including the possibility of more than one person leading the company.

 

Another item up for a nonbinding shareholder vote concerns a potential investment in Musk’s artificial intelligence startup, xAI. Denholm said Tesla has not yet invested in xAI, as it is focused on a different type of technology than Tesla’s real-world AI applications. However, if shareholders approve the proposal, it would initiate a formal process to evaluate the related-party transaction.

 

Tesla shares rose 2.9 per cent at 12:56 p.m. in New York. The stock has gained 12 per cent so far this year through Monday, lagging behind the 17 per cent rise in the S&P 500 Index. The recovery marks a notable rebound from earlier in 2025, when worries about Tesla’s aging vehicle lineup and a consumer backlash over Musk’s political activity had dragged the stock down.