Tesla’s latest pitch to investors over Elon Musk’s pay package gets straight to the point.
The automaker’s approach has gone from a focus on long-term growth and “fairness” to more explicitly addressing fears of losing him as CEO.
In a letter to investors on Monday, Tesla’s chair, Robyn Denholm, said passing his $1 trillion compensation plan was critical to Tesla becoming the most valuable company in the world — and to keeping him in the top job.
Failing to create an environment that would motivate Musk with sufficient pay, Denholm said, could mean the company would lose his “time, talent and vision.” Those have been essential to delivering extraordinary shareholder returns, Denholm wrote.
In 2018, the board persuaded investors to approve a 10-year compensation plan for Musk worth some $55 billion. It was then struck down by a Delaware judge in 2024. Tesla shareholders later voted to again approve the package, though a judge also rejected that effort, saying that Tesla’s board was too beholden to Musk. That led Tesla to craft a new proposal.
In 2025, the board’s messaging has been more urgent. Here’s how the approach has evolved:
The 2018 plan — and the 2024 do-over
The board has long said it wanted to ensure Musk had sufficient incentive: “Elon’s compensation will be 100% aligned with the interests of our stockholders,” the company wrote in 2018.
Tesla said at the time that Musk’s prior pay package had been “instrumental” in helping the company achieve its goals — and would be again.
As with the latest proposal, some proxy firms, including Institutional Shareholder Services and Glass Lewis, opposed the earlier pay package.
After a judge tossed out Musk’s 2018 pay package and Tesla decided to ask shareholders to vote again on it in an attempt to “ratify” the plan, Tesla leaned into language around fairness.
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In the lead-up to the 2024 re-vote, Tesla argued that honoring the original deal was a matter of fairness and “upholding our end of the bargain.”
“He delivered on his end of the bargain,” Tesla wrote in a June 2024 proxy filing. “It’s time for us to deliver on ours.”
“Fairness and respect require that we honor the collective commitment we made to Elon — a commitment that was, and fundamentally still is, about retaining Elon’s attention and motivating him to focus on achieving astonishing growth for our company,” Denholm wrote in a letter to investors that same month.
She also began to allude to a line of messaging that Tesla would double down on in 2025: that Musk had other companies where he could build his vision.
“What we recognized in 2018 and continue to recognize today is that one thing Elon most certainly does not have is unlimited time,” Denholm wrote in a mid-2024 letter to shareholders.
“Nor does he face any shortage of ideas and other places he can make an incredible difference in the world,” Denholm wrote. “We want those ideas, that energy and that time to be at Tesla, for the benefit of you, our owners. But that requires reciprocal respect.”
The 2025 plan
Denholm warned in her latest letter that, “without Elon, Tesla could lose significant value.” Such an outcome, she said, risked making it “just another car company” that would give up what it said is its edge in robotics.
She described Musk’s interest in voting power, describing “meaningful voting influence” as what he “values most.”
To drive home that idea, unlike the 2018 stock options, which didn’t give Musk voting power until they were exercised, the latest proposal involves shares, not options, said Jason Schloetzer, an associate professor at the McDonough School of Business at Georgetown University.
The latest proposal includes an agreement that would allow Musk to vote with earned shares before they vest, Schloetzer said in a text to Business Insider.
He said the additional feature would help Musk reach and maintain an “influential ownership vote” more quickly.
Like the earlier package, the latest proposal contains significant pay-for-performance measures, Schloetzer said.
The latest appeal to shareholders, in particular, appears designed to address concerns about its size by linking compensation to specific targets, Anat Alon-Beck, a law professor at Case Western Reserve University, told Business Insider.
“It’s very sophisticated,” she said. “They’re trying to make sure that when he does get paid in the future, they can really show that he’s meeting these milestones.”
Winning over investors
Tesla has been pushing to win shareholder approval for the package despite opposition from institutional investors and proxy firms. Tesla has taken out ads and put a countdown on its website, and Musk took time on the most recent earnings call to pitch it.
In 2025, the underlying questions and concerns that existed in 2018 around the board’s independence from Musk remain, said Schloetzer.
Also in question, he said, is the board’s “willingness and ability to effectively monitor and control” the management team.
Denholm and board member Kathleen Wilson-Thompson wrote in a September letter to shareholders that the company’s corporate governance framework allows the board to listen to shareholders’ will. The company didn’t respond to a request for comment from Business Insider on the board’s ability to act independently.
In some ways, the proposals in 2018 and 2025 are similar in their ambition, Dorothy Lund, a Columbia law professor, told Business Insider. Then, as now, she said, many people were skeptical that he could achieve such major milestones. But shareholders have seen big gains.
This time, Lund said, “He’s got to do a lot of pyrotechnics to get this company to where he earns that comp.”
