In a letter to shareholders, Tesla Chairwoman Robyn Denholm warned that CEO Elon Musk could leave if a new compensation package proposal is not approved.

Denholm said the $1 trillion compensation package was designed to retain and motivate Musk to continue leading the electric car company for at least another 7.5 years. She asserted that CEO Elon Musk’s leadership is “essential” to Tesla’s success, and warned that without attractive policies, the company would miss out on “Musk’s talent and vision.” Musk now has an important role at the US electric car company – at a time when the company is shifting to self-driving technology and AI.

The announcement was made on October 27, ahead of Tesla’s shareholders’ meeting on November 6. The US electric carmaker’s board of directors has been frequently criticized for not acting in the best interests of shareholders, with governance experts and activist groups questioning its independence and ability to monitor Musk’s influence.

Billionaire Elon Musk attended President Trump’s speech to Congress on Capitol Hill on March 4. Photo: AFP

Last month, Tesla’s board of directors proposed giving Elon Musk the largest compensation package in American corporate history. Accordingly, he could receive up to 12% of Tesla shares if he helps the electric car company reach its target market capitalization of $8.6 trillion in the next 10 years.

That would mean their market capitalization would have to increase nearly eightfold. Musk’s 12% stake would then be worth $1.03 trillion. The shares would vest in 12 tranches, each at a milestone. Musk is currently the world’s richest person with $495 billion, according to Forbes .

In a letter to shareholders, Robyn Denholm also called on investors to re-elect three veteran board members who have worked with Musk for many years. However, Tesla’s board of directors has long been under scrutiny for its close relationship with the CEO.

Earlier this year, a Delaware judge invalidated his 2018 compensation package, saying the deal was improperly approved and not made by fully independent directors.