According to Business Insider, Tesla shareholders are preparing for a crucial November 6 annual meeting where they’ll vote on Elon Musk’s potentially $1 trillion pay package and whether to invest in his AI startup xAI. The proposed compensation plan, introduced after a Delaware judge struck down Musk’s previous $56 billion package twice, requires Tesla to reach staggering milestones including an $8.5 trillion market cap by 2035 and selling 12 million vehicles annually. Tesla’s board has recommended against all shareholder proposals focused on accountability while supporting Musk’s compensation. Board chair Robyn Denholm warned that Musk might walk away from Tesla if shareholders reject the pay package, escalating what’s become one of the most high-stakes corporate showdowns in years.
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The Billion-Dollar Ultimatum
Here’s the thing about Musk’s proposed pay package – it’s essentially an all-or-nothing bet on Tesla becoming the world’s most valuable company. To unlock the full trillion-dollar payout, Musk needs to hit targets that seem almost science-fictional: reaching an $8.5 trillion market capitalization, selling 12 million vehicles per year, deploying one million robotaxis, and producing one million “AI bots.” And if he succeeds? His stake in Tesla would jump from 13% to at least 25%, giving him even more control over the company he’s built.
But the board’s warning that Musk might leave if he doesn’t get his way feels like corporate hostage-taking. I mean, is this really how public company governance should work? The same board that a Delaware judge said was “unduly influenced” by Musk when approving his 2018 package is now telling shareholders to approve an even larger one or risk losing their CEO entirely. Proxy advisory firms ISS and Glass Lewis aren’t buying it either – they’ve both urged shareholders to reject the proposal, calling it excessive with too little oversight.
The xAI Conflict Question
Now let’s talk about the xAI situation, because this is where things get really messy. Musk wants Tesla shareholders to approve an investment in his privately-held AI startup, which was valued at about $50 billion in 2024 and has raised over $12 billion. He’s already merged xAI with X in an all-stock deal and gotten SpaceX to commit $2 billion. Basically, he’s building what some call the “Muskonomy” – this interconnected web of companies where resources, talent, and chips might flow between public and private entities.
And that’s the problem. As Kevin Thomas from the Shareholder Association for Research and Education points out, letting a CEO use a public company as a “piggy bank” for his private ventures creates massive conflicts of interest. Think about it – if Tesla invests in xAI, who really benefits? Public shareholders or Musk’s personal portfolio? The lines are getting dangerously blurred here.
The Accountability Fight
Meanwhile, Tesla’s board managed to exclude at least 11 shareholder proposals focused on accountability and sustainability from the ballot. The few that made it through? The board recommends voting against all of them. One particularly concerning proposal would limit derivative lawsuits to only the largest shareholders, which New York State Comptroller Thomas P. DiNapoli calls a violation of “basic tenets of good corporate governance.”
So what we’re seeing here is a company that’s increasingly resistant to shareholder oversight while asking for unprecedented compensation and investment authority for its CEO. The timing couldn’t be more critical – Tesla’s navigating political controversies, struggling sales, and massive investments in AI and robotics. Shareholders have to decide whether betting everything on Musk’s vision is worth the governance compromises they’re being asked to make.
The real question isn’t just about money – it’s about what kind of company Tesla wants to be. Does it remain a publicly-traded corporation with proper oversight and accountability? Or does it become essentially an extension of Musk’s personal ambitions, funded by public markets but operating by its own rules? Thursday’s vote will tell us which direction shareholders prefer.
