Tesla Board Demands Shareholders Approve $878 Billion Musk Pay Package
Tesla’s board has issued an ultimatum to shareholders: approve a compensation package for Elon Musk worth up to $878 billion in company stock or risk his departure and potential stock collapse. The high-stakes vote scheduled for November 6 has created deep divisions among investors and governance experts.
Key Takeaways
- Tesla shareholders vote November 6 on $878 billion Musk compensation package
- Board frames decision as “pay Musk or risk his departure and stock collapse”
- Package would make Musk the highest-paid CEO in history by exponential margin
- Major institutional investors including CalPERS and Norway’s wealth fund oppose the deal
The Board’s Argument: Musk Essential for AI Transformation
Tesla’s board contends that only Elon Musk can deliver on his ambitious vision to transform the company into an artificial intelligence leader producing millions of self-driving robotaxis and humanoid robots. They argue his continued leadership is critical to achieving these technological breakthroughs.
Compensation Package Terms and Conditions
If Musk achieves all performance targets within ten years, Tesla’s market value would surge to $8.5 trillion, with Musk owning approximately 25% of the company. The compensation would dwarf any other CEO’s pay in history. Notably, Musk would still collect tens of billions even if he fails to meet most performance goals.
The package includes stock vesting periods designed to ensure Musk’s long-term commitment. Under the terms, he must hold earned shares for five years after vesting.
Investor Support and Opposition
Some investors support the unprecedented compensation arrangement. Nancy Tengler, CEO of Laffer Tengler Investments, a Tesla investor, defended the package based on potential returns.
“If the stock is going to go up sixfold – and that’s a requirement here – then I’m going to make a lot of money. Why do I care what kind of money he makes if he’s effecting the change and the vision?,” said Tengler.
However, major shareholders and governance experts have raised serious objections. The California Public Employees’ Retirement System (CalPERS) and Norway’s sovereign wealth fund have publicly opposed the compensation package.
Norges Bank Investment Management stated the proposal could dilute shareholder value and fails to address the risk of depending on a single leader. The fund criticized the package for not mitigating “key person risk” in staking Tesla’s future entirely on Musk.
Corporate governance experts argue the proposal violates standard principles because the board explicitly ties the company’s future to one leader with multiple conflicts of interest, creating unprecedented concentration of power.
