 "Musk's trillion-dollar temptation: Tesla faces a high-stakes shareholder vote")
When Tesla’s board proposed a performance-based package for Elon Musk, it read like a sci-fi blockbuster script: hit the astronomical target of nearly $8.5 trillion market value, and suddenly you’re in position to become the world’s first trillionaire corporate executive in history. But there’s a twist, what if shareholders don’t buy into the mega-pay plan? Musk might walk away, as Tesla’s chair Robyn Denholm has hinted.
Even Musk has signalled that he needs greater voting control offered by the stock grants in order to “effectively guide Tesla’s future plans for artificial intelligence.” If he hits all his targets, he will be able to control 29 per cent stakes of the company. In effect, “All or nothing. Give me the keys to the executive jet, or I’ll be out.” His proposed package, a mega-payout and a boardroom battle at its centre and the outcome could reshape how far one man can take a public-company rocket.
What’s happening around the vote?
The proposal has been put to a shareholder vote at Tesla’s annual meeting, scheduled to be held on Thursday (November 5). Ahead of that meeting, a few major investors and advisory firms have signalled opposition. The world’s largest sovereign wealth fund in Norway and influential proxy advisers recommended voting against the plan, saying the size and structure raise concerns about shareholder dilution and corporate governance.
The cautionary statement from Norges Bank, which is Tesla’s seventh-largest individual shareholder with an investment valued at $17 billion, came just ahead of the automaker’s annual shareholder meeting, according to a report by The Guardian.
“We are concerned about the total size of the award, dilution and lack of mitigation of key person risk – consistent with our views on executive compensation,” it said. “We will continue to seek constructive dialogue with Tesla on this and other topics.”
Meanwhile Tesla’s board, which has Musk’s own brother and long-time loyalists, and some allied investors are pushing for approval.
What happens if shareholders reject the proposal?
If shareholders vote down the package, the legal effect is simply that the board cannot implement this particular plan. The outcome would raise pressure on the board to propose an alternative retention or incentive package if it wants to keep Musk at the company.
However, Tesla’s chair Robyn Denholm has warned rejection could prompt Musk to consider his future at Tesla. Opponents argue that a shareholder rebuke could strengthen independent governance and reduce what they see as over-concentration of power. There is no automatic trigger to remove Musk if the package fails, but a high-profile rejection would reshape conversations about his tenure and the board’s strategy, Reuters reported.
How is control of Tesla at stake in all this?
Control questions centre on two effects: ownership stake and voting rights. The design of the proposed awards could, if exercised, increase Musk’s economic stake (29 per cent from the current 15.79 per cent) and depending on how shares and voting rights are allocated, his influence over key decisions. Opponents worry that massive awards tied to stock could further concentrate power in one executive, complicating the ability of other shareholders to check management.
Meanwhile, supporters argue that only by securing Musk’s long-term commitment can Tesla pursue ambitious technological goals. Either way, the vote is being framed by many investors as not just about pay but about governance and the balance of control at a company where a founder-CEO remains unusually dominant.
What was Musk’s pay controversy?
This is not the first time Musk’s pay has drawn legal and investor scrutiny. A 2018 compensation agreement, which was estimated to be worth about $56 billion if all targets were met, was approved by shareholders but later struck down by a Delaware judge, who called it “unfathomable” and found flaws in how the board approved it. Tesla has continued to litigate and appeal aspects of that ruling. But the history of the 2018 deal made investors and courts especially alert to the governance and fairness of the questions the new plan has raised.
How has Tesla performed recently?
Tesla remains one of the world’s largest electric-vehicle makers by deliveries, but it has faced increasing headwinds. Recent data shows slowing demand in major markets, notably China and parts of Europe, and analysts have pointed to softer US demand following changes to EV tax incentives.
Financially, Tesla has continued to post large revenues but has seen pressure on margins and varying profit results as competition grows and price cuts have been used to stimulate sales, the company reported last month. Beyond losing tax incentives and facing reduced income from selling regulatory credits to conventional automakers, Tesla is also faced with tariffs introduced under the Trump administration on imported auto parts, which had added a burden of over $400 million in costs during the quarter, Reuters reported.
The electric vehicle manufacturer further disclosed a 50 per cent surge in operating expenses, largely due to spending on AI and other R&D initiatives, as well as higher stock-based compensation, according to remarks made during its earnings call.