Tesla Board Chair Robyn Denholm issued an urgent warning to shareholders today: approve Elon Musk’s nearly $1 trillion compensation package by November 5th, or risk losing him as CEO and watching Tesla collapse from AI/robotics pioneer into “just another car company.” The stark two-page letter, posted by Sawyer Merritt on X, frames the upcoming shareholder vote as an existential moment for the electric vehicle maker.

Denholm’s letter comes as Tesla faces mounting opposition from major proxy advisory firms and investors who have spent months demanding Musk focus more attention on Tesla, not less. The vote takes place at Tesla’s annual meeting on November 6th, with online votes due by 11:59 PM ET on November 5th.

The $1 Trillion Question Facing Tesla Shareholders

Denholm’s letter poses a binary choice: “Do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?”

The proposed 2025 CEO Performance Award would grant Musk approximately 423 million additional shares, potentially increasing his ownership stake from roughly 13% to nearly 29% if all performance milestones are achieved, according to Fortune. The package requires Musk to commit to leading Tesla for at least 7.5 years.

The compensation is structured around ambitious targets, including achieving an $8.5 trillion market capitalization—nearly 8x Tesla’s current $1.1 trillion valuation—plus milestones for robotaxis, Optimus humanoid robot deliveries, and autonomous vehicle deployment, reports Cryptopolitan.

Denholm warned that rejection could trigger Musk’s departure: “Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become: a transformative force reimagining the fundamental building blocks of mobility, energy and labor, with products such as FSD and Optimus.”

Major Proxy Advisors Recommend Voting Against Package

Despite Denholm’s urgent plea, Tesla faces significant institutional opposition. Both Institutional Shareholder Services (ISS) and Glass Lewis—the two largest proxy advisory firms that provide voting guidance to major institutional investors—have recommended shareholders vote “no” on the compensation package, according to CNBC.

ISS stated the package “locks in extraordinarily high pay opportunities over the next ten years” and “reduces the board’s ability to meaningfully adjust future pay levels,” while warning its “astronomical” size would dilute shareholder value and voting rights.

Glass Lewis echoed these concerns, stating the potential dilution to shareholders and other terms “warrant significant concern,” reports Bloomberg.

Musk fired back during Tesla’s Wednesday earnings call, calling the advisory firms “corporate terrorists” and claiming they “have no freaking clue.” He added: “I just don’t feel comfortable building a robot army here and then being ousted because of some asinine recommendations from ISS and Glass Lewis.”

Third Attempt To Secure Musk Compensation After Delaware Defeats

This vote represents Tesla’s third attempt to secure massive compensation for Musk after a contentious legal battle. In January 2024, Delaware Chancery Court Chancellor Kathaleen McCormick voided Musk’s original $56 billion 2018 compensation package, ruling that Tesla hid crucial details from shareholders and that Musk had controlled board members rather than negotiating fairly.

Tesla shareholders voted in June 2024 to reinstate that package, but McCormick rejected the ratification as improperly reversing her ruling. The case is currently on appeal to the Delaware Supreme Court, which heard arguments earlier this month.

In response to the Delaware ruling, Tesla moved its incorporation from Texas in June 2024 and implemented new bylaws requiring shareholders to own at least 3% of the company (worth over $30 billion) to file derivative lawsuits—a direct response to the original challenge filed by Richard Tornetta, who owned just nine shares when he sued in 2018.

Board Chair Defends Package Structure, Touts Optimus Progress

In a Monday morning appearance on CNBC’s “Squawk Box,” Denholm defended the compensation structure, explaining that economic value is bifurcated from voting rights and doesn’t vest until year 7.5, even if performance milestones are achieved earlier.

“What we have done in the plan is we’ve bifurcated the voting rights versus the economic value,” Denholm explained. “He doesn’t get those economic value till at least year seven and a half, even if he delivers them in the first five years.”

Denholm also provided updates on Tesla’s Optimus humanoid robot project, which she called critical to the company’s AI ambitions. “I’ve been in the lab with Optimus,” she said. “He can fold laundry. He can wipe the table down really well, where he can hand things to you, you can actually shake hands with him. The tactile nature of his hand is actually really very good.”

She described Optimus as “very mobile and very dexterous” and noted the robot is “walking around the offices in Palo Alto all the time.”

Retail Investors Expected To Play Decisive Role

Denholm noted that retail traders comprise approximately 30-40% of Tesla’s shareholder base and achieved record turnout in last year’s vote. This retail investor bloc has historically supported Musk’s compensation packages, with shareholders approving the 2018 package with 73% of non-Musk shares in favor, and 84% approval when Tesla held a second ratification vote in 2024.

However, opposition extends beyond proxy advisors. New York City Comptroller Brad Lander, who oversees a $300 billion pension fund that holds approximately $1.1 billion in Tesla stock, told CNBC he “vociferously opposes this pay package.”

A coalition including the American Federation of Teachers and Public Citizen launched a “Take Back Tesla” campaign urging shareholders to reject the package, reports CNBC.

Egan-Jones Proxy Services broke ranks with ISS and Glass Lewis to support the package under its Wealth Focus Policy, stating the potential payout is justified given the ambitious performance targets. The firm noted Musk “would walk away with nothing if he failed to meet the specific milestones” but both he and shareholders would benefit significantly from his success.

EVXL’s Take

This shareholder letter reveals a stunning contradiction at the heart of Tesla’s governance crisis. For months, major institutional investors have been demanding that Musk dedicate more time and attention to Tesla, not less. In April 2025, state treasurers from eight states sent an open letter to Denholm expressing “serious questions about whether Tesla’s leadership is fully engaged in addressing the company’s core challenges,” citing Musk’s divided attention across multiple companies and his high-profile role in the Trump administration.

Now, just six months later, that same board chair is warning shareholders they need to pay Musk nearly $1 trillion—equal to Tesla’s entire current market capitalization—to keep him motivated and engaged. The message seems to be: we couldn’t get him to focus by asking nicely, so now we need to pay him an unprecedented sum to stay interested.

This comes after what can only be described as a year of self-inflicted brand destruction. As we documented extensively, Musk’s political involvement triggered a global backlash that marketing professor Scott Galloway called “one of the greatest brand destructions” in corporate history. Tesla’s European sales collapsed, with France down 67% and French Tesla owners actually suing the company over Musk’s support for far-right political groups. Swedish pension fund AP7 dumped its entire $2.46 billion Tesla stake over verified labor rights violations.

The company’s stock lost $380 billion in market value in 2025, making it the worst-performing large-cap stock this year. Q2 2025 deliveries dropped 14% year-over-year, driven by what analysts describe as consumer pushback against Musk’s controversial political positions.

And now the board’s solution is to give him more money and more control?

What’s particularly galling is that this represents Tesla’s third attempt to secure Musk’s compensation after the Delaware courts repeatedly ruled that the board failed its fiduciary duties to shareholders. Rather than accept judicial oversight, Tesla simply moved its incorporation to Texas and implemented new bylaws requiring 3% ownership to file derivative lawsuits—effectively pricing out ordinary shareholders from challenging board decisions.

The letter’s apocalyptic framing—vote yes or Tesla becomes “just another car company”—feels like a hostage negotiation rather than good governance. Tesla’s success shouldn’t depend on one person’s satisfaction with their compensation package. If Musk truly believes in Tesla’s mission and its potential to become the world’s most valuable company, why does he need an additional $1 trillion in stock to stay motivated?

The bigger question for Tesla shareholders is whether they’re investing in a company with sound governance and a sustainable business model, or whether they’re simply betting on one mercurial individual who requires constant appeasement through ever-larger payouts. Based on 2025’s performance—both operational and reputational—that’s a legitimate concern.

What do you think? Share your thoughts in the comments below.