Vote this week on Elon Musk’s pay could determine ‘Tesla’s future’

Tesla wants to make Elon Musk, the richest person in the world, even richer. once again.

The electric car company, which aims to transition to artificial intelligence and robotics, is scheduled to hold its annual shareholders meeting on Thursday. Its board of directors is asking investors to vote in favor of a plan that includes a pay package based on CEO performance that could amount to a trillion dollars for Musk. The award, along with other proposals, has drawn criticism and support from a team that includes consulting firms, labor unions, shareholder groups and fans of executive power.

Tesla ( TSLA ) has ramped up its campaign for Musk ahead of the vote, unleashing a media blitz that includes an ultimatum: pay up or risk losing him at a vital moment for the company. “Tesla’s future is in your hands,” she announced on the X social media platform. President Robin Denholm on CNBC’s “Squawk Box” last week urged shareholders to vote as the company’s Optimus robot distributed candy in Times Square.

“We are changing transportation with AI and we are changing the way families will work and how workplaces will work with robots,” Denholm said. “Tesla aims to be at the forefront of this.”

During the company’s earnings call last month, Musk said the compensation package addresses his need to retain influence over the company without the risk of being unduly “ousted.” “The point is that there has to be enough control over the vote to have a strong influence, but not so much that I can’t get fired if I go crazy,” he said, according to transcripts provided by AlphaSense.

Another proposal in the 2025 plan, which could make Musk richer, would ask for approval to invest in xAI, a private artificial intelligence company founded by Tesla’s CEO. Musk has previously said there will be no merger between Tesla and xAI but he is open to investing.

A coalition of trade unions and corporate watchdogs are opposed, urging shareholders to vote against the compensation proposal. They took issue with Musk’s embrace of “right-wing political movements” and Tesla’s declining sales. Shares are up 23% year-to-date through Monday’s close.

Opponents still worried about ‘main man threat’

Some major shareholder advisory firms oppose this proposal. The pay package was designed to retain Musk because of the board’s belief in his exceptional abilities, but “there are no guiding elements within the award to ensure his focus and time remain on Tesla,” ISS wrote in its report. Glass Lewis warned of the “significant dilution” involved in the pay package structure, and the “absence of strong provisions to reduce key man risk”.

The company said in the X post that the reports “defy common sense” and that its “standard approach is designed to report deviations from the norm,” which is inappropriate for Tesla.

The Florida board in a letter endorsed the comprehensive plan, saying the cost of mitigation is outweighed by trillions of dollars in potential value creation. Cathie Wood, president of Ark Invest and a longtime Tesla backer, said that if Musk and the company achieve their set goals, “employees and their families will be richer than they ever dreamed.”

Musk’s pay has been a source of drama before. The CEO was given a Tesla performance package for 2018, but a Delaware court overturned it and rejected the company’s appeal. The company has since moved to Texas, where the 2025 package, if approved, would be insulated from similar lawsuits due to the state’s business-friendly governance laws.

If previous voting results are any indication of next week’s vote, the new plan will likely pass. Tesla revealed that 72% of voting shares, excluding shares of Musk and his brother Kimbal, supported the 2024 plan. The high turnout from retail investors – about 30% of shareholders – helped it win the vote.