Elon Musk Warns of Tesla Exit Over $1 Trillion Pay Dispute Ahead of Shareholder Vote

Highlights

Elon Musk threatens to leave Tesla unless shareholders approve a $1 trillion performance-based pay deal tied to future growth.

Elon Musk has once again stirred controversy at Tesla, threatening to walk away from the company if shareholders fail to approve his proposed $1 trillion performance-based pay package. The ultimatum comes ahead of Tesla’s annual shareholder meeting scheduled for November 6, where investors will vote on whether to grant Musk up to 12 percent of Tesla’s stock if the company achieves a market capitalisation of $8.5 trillion.

Tesla’s board, led by Chair Robyn Denholm, has defended the plan, emphasising that Musk’s leadership is central to the company’s long-term goals. In a letter to shareholders cited by Reuters, Denholm argued that the compensation plan is designed to retain and motivate Musk for the next seven and a half years, ensuring his focus remains aligned with Tesla’s growth and innovation strategy. She warned that rejecting the plan could result in the company losing the “time, talent, and vision” of its most influential leader.

The proposal has sharply divided investors and analysts. Proxy advisory firm Glass Lewis has urged shareholders to vote against the plan, raising concerns about shareholder dilution and the independence of Tesla’s board. Critics argue that the board remains too close to Musk and question whether it can exercise the necessary oversight over such a monumental compensation package.

The debate follows a Delaware court ruling earlier this year that nullified Musk’s previous 2018 pay deal, valued at about $56 billion, on the grounds that it had been improperly awarded and lacked sufficient independence in the approval process. That decision has fueled further scrutiny over Tesla’s corporate governance and how the company manages its relationship with its high-profile CEO.

Some former investors and employees have voiced skepticism about Musk’s latest demand. Romain Hedouin, a former Tesla investor and employee, called the proposed $1 trillion deal “excessive”, suggesting that the company could succeed under different leadership at a much lower cost.

Musk, however, remains firm in his stance. Defending his value to the company, he posted on X (formerly Twitter), saying, “Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me.”

According to Tesla’s filings, the new pay plan emerged after Musk warned the board that he might leave the company unless he was granted a greater voting stake. Internal documents reveal that a special committee met Musk ten times, during which he consistently reiterated his desire for about 25 percent voting control. Musk reportedly claimed that this level of control was essential to safeguard Tesla’s innovation strategy against external interference.

The committee concluded that Musk’s threat to exit was genuine and that his continued commitment was critical to Tesla’s success. If approved, the new compensation package would give Musk a path toward increased control — but only if Tesla meets historic financial and operational goals.

Supporters see the move as a bold strategy to lock in Musk’s visionary leadership, while critics warn that approving such a vast payout could set a dangerous precedent for corporate governance and executive compensation.