Tesla board says it is prepared to name a new CEO if Elon Musk leaves for $1T pay rejection

Tesla is preparing for the possibility of Elon Musk stepping back from the company if shareholders vote against his proposed $1 trillion pay package at the upcoming annual meeting, according to an interview with Robyn Denholm, the chair of the board, reported by Bloomberg.

Robyn said that if Elon Musk leaves or becomes less involved, Tesla is ready to name a new chief executive from inside the company to ensure what she described as an “orderly transition.”

She said internal succession is the most likely path, though the board is not fully ruling out candidates from outside.

Elon Musk’s compensation plan would give him about 25% voting control if he achieves major growth milestones linked to Tesla’s market value, including expansion in electric cars, robotics, and the robotaxi program.

Elon Musk has made it clear that if he does not receive the compensation structure he wants, he may shift more of his time toward his other companies, including SpaceX and xAI. Robyn said:

Board campaigns for shareholder support

Robyn emphasized that the pay plan is tied to performance expectations, not simply a payout.The shareholder vote will take place at Tesla’s annual meeting on November 6.

said the outcome is not guaranteed because many investors wait until the last minute to cast their votes.About 30% of Tesla’s shareholders are retail holders, which is unusually high, so the board has been making direct efforts to encourage them to vote.

Robyn and other board members, including James Murdoch and former Chipotle CFO Jack Hartung, have been meeting with some of the largest institutional shareholders, including Vanguard Group, BlackRock Inc., and State Street Corp. Many investors often follow recommendations from proxy advisory firms.

Two of the largest, ISS and Glass Lewis, have recommended voting against the compensation plan. Robyn said:

As part of the effort to encourage voting, Tesla placed its Optimus humanoid robot outside the Nasdaq building in New York.

The robot handed out Tesla-branded gummy candies, waved at people, and posed for pictures as crowds gathered. Videos were taken and shared widely online.

Succession planning and future business decisions

Tesla shares rose 2.9% at midday in New York, and the stock is up 12% this year, compared to a 17% increase in the S&P 500 Index.

Earlier this year, the company’s stock was affected by concerns over an aging vehicle lineup and public reactions to Elon Musk’s political activity.

The board believes that Elon Musk’s continued engagement is tied to Tesla’s artificial intelligence development and its future products.

If the proposal does not get enough support, Tesla has what Robyn described as Plan B. She said Tesla has a strong internal leadership group. One key figure is Tom Zhu, who oversees global production and operations in China.

Tom has worked across multiple divisions in Tesla, a deliberate move to ensure internal candidates understand the company deeply. Robyn said Tesla has “a whole range of different alternatives out there,” including the possibility of splitting leadership roles among more than one person.

Another item in the upcoming meeting is a nonbinding vote on whether Tesla should invest in xAI, Elon Musk’s artificial intelligence company.

Robyn said, “We haven’t invested in it” because the technology being built at xAI is different from what Tesla focuses on.

However, Robyn added that if shareholders approve the idea, it would start a review process to evaluate the related-party transaction before any investment happens.

Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.