Context:

Tesla's Board Chair, Robyn Denholm, urged shareholders to approve Elon Musk's nearly $1 trillion pay package, emphasizing his critical role in the company's future as it transitions beyond traditional automotive boundaries towards Full Self Driving and Optimus initiatives. Denholm warned that without Musk, Tesla's value could significantly decline. However, the proposal faces opposition from various groups, including proxy advisors and unions, due to concerns over Musk's political affiliations and their perceived impact on the brand. The annual meeting is set for November 6, with the shareholder vote closing the previous day, amid mixed financial performance from Tesla. Denholm highlighted the necessity of aligning Musk's compensation with performance to retain his leadership and vision.

Dive Deeper:

• The proposed pay package for Musk includes 12 tranches of shares contingent on Tesla achieving specific milestones, potentially granting him over 423 million additional shares and increased voting power.

• Despite a 12% revenue increase, Tesla reported third-quarter earnings that fell short of expectations, following two consecutive quarters of declining earnings.

• Opposition to Musk's pay package has intensified, with Institutional Shareholder Services advising against it and a coalition of unions launching the 'Take Back Tesla' campaign targeting Musk's political engagements.

• Denholm's letter conveyed that Musk's leadership is fundamental to achieving extraordinary shareholder returns and maintaining the company's innovative trajectory.

• The vote on Musk's compensation coincides with a broader agenda that includes the re-election of several board members, highlighting ongoing governance discussions within Tesla.