Tesla’s board has placed an unprecedented wager on CEO Elon Musk, asking shareholders to approve a compensation package worth up to $878 billion — the largest in corporate history. Investors will vote Thursday on whether to endorse the plan or risk Musk leaving the company, a move that could destabilize Tesla’s stock and leadership.
The proposal, tied to aggressive performance targets over the next decade, would see Tesla’s market value climb to $8.5 trillion if achieved. Musk’s stake would reach roughly one-quarter of the company. Supporters argue that only Musk can deliver Tesla’s transformation into a leader in artificial intelligence, autonomous vehicles, and robotics.
Many investors have rallied behind the plan. “If the stock goes up sixfold, everyone wins,” said Nancy Tengler, CEO of Laffer Tengler Investments. Critics, however, have warned that the deal defies corporate governance standards by tying Tesla’s future too closely to one individual. The California Public Employees’ Retirement System and Norway’s sovereign wealth fund have both come out against the package, citing “key person risk” and potential shareholder dilution.
Tesla board chair Robyn Denholm has acknowledged the company’s dependence on Musk, warning that Tesla could lose significant value if he walked away. Musk, who also leads SpaceX, Neuralink, and xAI, has previously told board members he may shift his focus to those ventures without a new compensation plan.
The vote follows controversy surrounding Musk’s 2018 pay package, which a Delaware judge voided earlier this year as an “unfathomable sum.” Tesla has since reincorporated in Texas, where Musk will be allowed to vote his 15% stake — potentially tipping the outcome in his favor.
Corporate governance experts remain divided. Harvard’s Krishna Palepu called the deal aligned with shareholder interests, noting that payouts depend on achieving massive value creation. Others, like Yale’s Gautam Mukunda, dismissed the justification, arguing Musk already owns enough Tesla stock to become the world’s first trillionaire.
“The board is being held hostage by a superstar CEO,” said Charles Elson of the University of Delaware. “The appropriate response is to tell him, ‘Have a good day.’”
If approved, the package would reaffirm Tesla’s identity as a company built on Musk’s singular vision — and test how far investors are willing to go to keep him at the helm.
