Could Tesla Lose Elon Musk Over US$1tn Pay Package Decision?

It’s hardly a surprise that parting with US$1tn to keep Elon Musk’s services is a tough decision for Tesla shareholders. 

But decide they must, says company Chair Robyn Denholm, who has pleaded for a second time for the enormous compensation package – designed to retain and motivate Musk – to be approved. 

Writing to shareholders in a 27 October letter, Denholm described the critical nature of the decision saying: “The fundamental question for shareholders at this year’s Annual Meeting is simple: do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most available company in the world?”

It follows a prior letter sent on 21 October, in which Denholm urged shareholders to “supercharge Tesla’s next phase of exceptional growth, innovation and value creation”. 

Innovation and compensation

Tesla’s proposed performance-based package for Musk was initially offered in early September 2025, following the company’s announcement of its ‘Master Plan IV’ – an all-encompassing strategy setting out how it would spearhead a more sustainable future for the planet. 

The deal – the largest corporate pay award in history if approved – is based on Musk meeting a list of ambitious, decade-long targets. 

These include boosting the company's valuation nearly eightfold, or by around US$7.5bn, hitting specific sales figures for Tesla vehicles and developing the company’s business streams in areas like AI and robotics. 

All compensation under the package is performance-based, with Musk receiving no salary or cash bonuses as part of the deal. If he fails to double the company’s valuations over the next decade, he will receive no award. 

At the time, Tesla said in a filing to the US Securities and Exchange Commission that “growth that may seem impossible today can be unlocked with new ideas, better technology and greater innovation".

The filing explained: “We believe that Elon’s singular vision is vital to navigating this critical inflection point. We also recognise the formidable nature of this undertaking and as a result, the importance of having a leader who is not only willing and capable but eager to meet this challenge.”

Voting for a better world

Writing in her letter to shareholders, Robyn said that she and fellow board member Kathleen Wilson-Thompson had developed the customised performance package as part of a seven-month Special Committee process “that aligns shareholder value and measurable business outcomes with the interests of our CEO”. 

She wrote that the goal was twofold: to retain and incentivise Musk, but to also “do so in a manner that promotes the development of products and services that will propel our world toward a cleaner, safer and more prosperous future while creating unparalleled value for our shareholders. 

“The bottom line is simple,” Robyn added. “Elon is rewarded only if and when he delivers extraordinary performance that benefits all Tesla shareholders.”

She told shareholders they did not deserve a future “without Elon” and explained: “At a time when companies – both big and small – are competing to be the first to bring groundbreaking AI technologies to market, we could not risk losing the best leader in the industry to put Tesla on top.  

“Now is a pivotal moment for our company to emerge as a leader in AI, and with our exceptional CEO at the helm, we are perfectly positioned to seize it.”

The company is set to vote on the pay package at a 6 November shareholder meeting. 

Trillion dollar gamble

Musk has been divisive for Tesla. His forays into politics, particularly his alliance with US President Donald Trump, have been cited by market analysts as a catalyst for slowing vehicle sales.

In May 2025, the Wall Street Journal ran a report stating the business was looking to replace the CEO – claims that Tesla described as “absolutely false”.

An October study from economists at Yale University claims that Musk’s “polarising and partisan actions” over the past three years have cost Tesla between 1 million and 1.25 million in US sales and boosted competitor sales by as much as 22%. 

The research team described this as the “Musk partisan effect”, citing actions such as his roughly US$300m in donations to republican candidates and his leadership of the Department of Government Efficiency (DOGE) under Trump. 

In her letter to shareholders, Robyn said: “Though it’s no question that Elon has other pursuits, he has proven that one of the many things that make him unique is his ability to stretch his capacity beyond normal limits and remain successful at Tesla.”