Tesla is reigniting a heated debate as it pressures shareholders to reapprove CEO Elon Musk’s colossal $56 billion pay package—a deal that could balloon to $1 trillion if Tesla’s stock surges. Critics accuse the EV giant of recycling old threats to secure votes, raising fresh concerns about corporate governance and Musk’s sway over the company.
The $56 Billion Pay Package Explained
In 2018, Tesla’s board granted Musk a performance-based stock option plan, tying his earnings to ambitious targets like market cap growth and revenue milestones. Shareholders initially approved it, but a Delaware court overturned the package in early 2024, citing unfair negotiations and conflicts of interest.
Now, Tesla is urging investors to reinstate the same deal at its June 13 annual meeting. If passed, Musk—already the world’s wealthiest person—could see his net worth skyrocket further, especially if Tesla’s valuation rebounds.
Tesla’s Familiar Scare Tactics
To rally support, Tesla’s leadership has resurrected warnings that Musk might scale back his involvement or shift focus to his other ventures (like SpaceX or xAI) if the package fails. This mirrors past campaigns:
- In 2016, Tesla suggested Musk could leave if shareholders rejected the SolarCity merger.
- In 2018, similar fears were stoked during the original pay package vote.
Corporate watchdogs argue Tesla is exploiting Musk’s cult-like following to pressure investors, calling the strategy manipulative.
Shareholders Are Split
The vote has divided Tesla’s investor base:
– Institutional opposition: Norway’s sovereign wealth fund and CalPERS reject the package as excessive. Proxy advisors Glass Lewis and ISS also advise “no” votes, citing Musk’s divided attention and Tesla’s recent struggles (slumping sales, layoffs).
– Retail investor support: Many individual shareholders back Musk, viewing him as critical to Tesla’s future.
Legal Hurdles and Ethical Concerns
Even if approved, legal challenges loom. The Delaware court criticized Tesla’s board for its close ties to Musk, and experts doubt a re-vote alone will resolve those issues.
Ethically, the package sparks debate: Should Musk earn a payout rivaling national GDPs while Tesla faces recalls, layoffs, and quality issues? Critics say it reflects poor governance.
What Happens Next?
- If approved: Musk’s grip on Tesla tightens, potentially stabilizing investor confidence.
- If rejected: The board may negotiate a smaller package, testing Musk’s commitment.
Tesla’s aggressive tactics underscore deeper governance questions—is the company prioritizing Musk over shareholders? The June 13 vote will reveal whether old threats still work or if investors demand change.
