Tesla is rehashing old threats to convince shareholders to approve Musk’s trillion-dollar payday

Tesla’s board of directors issued a stark warning to shareholders today: Elon Musk’s unprecedented $1 trillion pay package approved Or risk losing him as CEO. It’s a familiar threat, one the board has used before, and if history offers any clues, it will likely work again.

Tesla’s executive team is on full steam in the run-up to its annual shareholder meeting on November 6, urging shareholders to approve their proposal to make Musk, already one of the richest people in the world, unfathomably richer. If they don’t, they warn he may leave the company for greener pastures.

“Without Elon, Tesla could lose significant value, as our company may no longer be what we aim to become: a transformative force that reimagines the fundamental building blocks of mobility, energy and work, with products like FSD and Optimus, working to improve humanity in the process,” Robin Denholm, Tesla Chairman, said in a letter to shareholders on Monday.

It was basically, hit-and-run, Same argument I made last yearwhen shareholders were pressured to approve a $55 billion pay package for Musk. At the time, this was the largest compensation package ever considered for a CEO — a package that, of course, has since dwarfed the current payday proposal.

Shareholders approved a distribution of $55 billionThey are likely to do the same next month, despite serious concerns among the corporate governance class. Proxy firms Institutional Shareholders Service (ISS) and Glass Lewis recently issued guidance advising shareholders to reject the package, calling it too large and unduly influenced by a board that was found in court to have been captured by Musk. For his part, Musk described proxy companies as “terrorist companies” during Tesla’s earnings call last week.

The risks are high, given the current state of Musk’s compensation. Last year, a Delaware court threw out Musk’s pay package, valued at more than $50 billion, arguing that the deal was flawed and unfair to shareholders, and that Musk had undue influence over its composition. Shareholders voted twice for approval The huge compensation, but the judge upheld her ruling to prevent this. Tesla has He appealed the decision To the Supreme Court of Delaware. In response, Musk organized a vote to move the company’s incorporation to Texas, which does not have decades of corporate legal precedence like Delaware.

Tesla’s board of directors will likely feel confident in the outcome of the November 6th vote. Musk bought some of the company’s stock, and Denholm conducted rare interviews to gain voting rights. Tesla sales rose in the third quarter, thanks to consumers eager to claim the expiring $7,500 tax credit. If they want to win, now is the time. Tesla’s earnings are likely to grow much worse in the coming quarters; Musk himself admitted this. More tax breaks — which Musk shares some credit for removing — won’t lead to lower sales. If Tesla wants to become the AI ​​and robotics company that Musk promised, now is the time.

Denholm’s letter ignores most of these challenges. Musk’s political side projects, his support for President Donald Trump, his leadership of DOGE, his support for far-right parties in Europe, his Nazi salute at Trump’s inauguration, his decision to let election deniers and white supremacists return to X… of course, Denholm doesn’t deal with those. But by ignoring them, they hurt shareholders.

Regardless of all this, the same problems will continue for Tesla. The company’s lineup is aging, its competition is growing, and it has yet to prove that its approach to autonomous driving will give it the advantage. Regulatory accreditations are about to disappear. Tariffs continue to impact the company’s bottom line.

Instead of offering a plan for the future, Tesla’s board is urging shareholders to make more of the same.