Tesla Risks Losing CEO Musk If $56 Billion Pay Package Isn’t Approved, Board Chair Warns

Tesla’s board chair Robyn Denholm has issued a stark warning: the company could lose visionary CEO Elon Musk if shareholders reject his $56 billion compensation package at the June 13 annual meeting. The pay deal—now valued at nearly $1 trillion based on growth projections—was voided by a Delaware court earlier this year, setting up a high-stakes revote.

Why Musk’s Pay Package Is Controversial

Originally approved in 2018, Musk’s performance-based compensation tied stock options to ambitious Tesla milestones:
– Increasing market cap from $50B to $650B
– Hitting revenue and EBITDA targets
– All 12 performance tiers were met early

But in January 2024, a Delaware judge nullified the package, calling it “unfathomable” and citing concerns about board independence. Tesla’s directors have now re-proposed the same package, arguing it’s essential to retain Musk’s leadership.

Board Chair’s Dire Prediction

In a regulatory filing and public letter, Denholm framed this as existential for Tesla:

“Elon isn’t a typical CEO, and Tesla isn’t a typical company. Losing his focus could derail our AI, robotics, and energy projects.”

Musk has hinted he might reduce Tesla involvement without greater control (via his stock options) to focus on SpaceX, xAI, and Neuralink.

Shareholders Are Sharply Divided

Opponents like CalSTRS call the package “excessive,” while supporters like investor Ron Baron argue:

“Tesla’s stock would drop 25% overnight without Elon.”

Retail investors (40% of shares) largely back Musk, seeing him as integral to Tesla’s EV dominance and tech moonshots.

What’s at Stake for Tesla?

With challenges mounting—Chinese competition, slowing EV demand, and a 30% stock drop YTD—the vote could decide:
✅ Approval: Locks in Musk’s leadership during critical AI/robotaxi development
❌ Rejection: Risks leadership vacuum with no clear successor

Tesla is campaigning hard via its “Vote Tesla” initiative, while Musk is teasing new AI announcements ahead of the vote.

The Bottom Line

June 13’s decision will shape Tesla’s next decade. Musk’s pay isn’t just about compensation—it’s a referendum on whether Tesla can remain a disruptor without its iconic leader.