Musk May Leave If $1 Trillion Pay Plan Gets Rejected, Tesla Chair Warns
Musk had, according to reports, 'hijacked' the Tesla earnings call last week to push for the massive pay hike.
Billionaire Elon Musk may leave Tesla if the proposal to raise his pay to $1 trillion fails to receive shareholders' nod, the electric vehicle major's Chair Robyn Denholm said, according to news agency Reuters.
The report cited a letter from Denholm to the company shareholders, warning them of this outcome. This letter was sent out ahead of the annual board meeting on Nov. 6.
The company's board has faced widespread scrutiny for allegedly not acting in accordance with the shareholder's interests.
Reuters reported that governance experts and advocacy organisations have questioned the board's independence and the amount of influence that Musk might exert over them.
Denhold said in her letter that Musk's leadership was "critical" to Tesla's success and said that the firm could lose his "time, talent and vision" when presented with the absence of a plan to incentivize him adequately.
She illustrated his role as "vital" for Tesla to become a global leader in artificial intelligence and autonomous technology.
The proposed pay package would provide Elon Musk with 12 tranches of stock options attached to lofty goals such as achieving a market capitalization of $8.5 trillion and accomplishments in autonomous driving and robotics.
The letter further urged the shareholders to re-elect three long-serving directors who had worked closely with Elon Musk and argued that the package was key to have Musk's incentives in line with long-term growth and shareholder value.
US courts have also been critical of Musk's influence over Tesla's board, with one in Delaware striking down a 2018 pay deal stating that it was improperly awarded.
The courts alleged that the deal was negotiated by directors who weren't fully independent.
