• Elon Musk may leave Tesla if his $1 trillion pay package is rejected, according to Board Chair Robyn Denholm.
• The proposed performance plan includes ambitious targets for Musk to achieve over seven and a half years.
• Proxy advisory firms have recommended against the pay package, raising concerns about governance and independence.
• Tesla's annual shareholder meeting is scheduled for November 6, with the vote closing on November 5.
• Despite controversy, Tesla stock has seen a rise of 3.1% as of midday trading.

Tesla's Board Chair, Robyn Denholm, warned shareholders that Elon Musk could exit as CEO if a proposed $1 trillion pay package is not approved. In a letter to investors, Denholm emphasized that Musk's leadership is critical for Tesla's future, especially as the company aims to lead in artificial intelligence and autonomous technology. The annual shareholder meeting will take place on November 6, with voting closing at 11:59 p.m. ET on November 5, according to Reuters, Times of India, and Al Jazeera.

The proposed pay package is performance-based, offering Musk stock options tied to several ambitious targets, such as achieving a market capitalization of $8.5 trillion. Denholm described the plan as essential for aligning Musk's incentives with shareholder value and long-term growth. She reinforced the need for Musk's continued expertise, suggesting that without an adequate incentive mechanism in place, the company risks losing his "time, talent and vision," which have been pivotal in Tesla's current success, according to Times of India and Reuters.

Denholm's letter also highlights a growing scrutiny of Tesla’s governance, emphasizing that the board has faced criticism for its close relationship with Musk. Notably, a Delaware court invalidated Musk's previous 2018 pay agreement, citing a lack of independence among the directors involved in negotiating it. Moreover, two prominent proxy advisory firms, Glass Lewis and Institutional Shareholder Services, have recommended against Musk's new pay plan, describing concerns over its magnitude and the absence of guarantees that Musk will remain focused on Tesla amidst his numerous ventures, according to Al Jazeera and Reuters.

Despite the controversies surrounding Musk's compensation plan, Tesla's stock has experienced an uptick of 3.1% during midday trading. Nevertheless, as the November 6 meeting approaches, the future leadership of Tesla remains a pivotal concern for investors, as affirmed by Denholm's letter, which ultimately urges shareholders to vote in favor of the pay package that aims to retain Musk at the helm of the company, according to Times of India and Al Jazeera.