Tesla eyes internal CEO candidates if Musk steps down over pay vote, Bloomberg News reports

Tesla  is looking at internal CEO candidates if Elon Musk leaves in case the $1 trillion pay plan is not passed at the annual shareholder meeting next week, Bloomberg News reported on Tuesday, citing the automaker’s board chair.

Chair Robyn Denholm had urged shareholders on Monday to vote for the proposed CEO compensation package, seeking to keep the world’s richest person at the helm of Tesla as the company pivots to focus on self-driving technologies and human-like robots.

The development underscores how central Musk remains to Tesla’s identity and investor confidence, even as it faces pressure to reduce dependence on him.
Tesla did not immediately respond to a Reuters request for comment.

The proposed pay package would grant Musk 12 tranches of stock options tied to lofty targets, including a market capitalization of $8.5 trillion and ambitious milestones in autonomous driving and robotics.

A string of senior departures over the last few years has left Tesla with a shallow management bench, where Chief Financial Officer Vaibhav Taneja and Senior Vice President of Automotive Tom Zhu are now the most prominent executives after Musk.

Elon Musk’s $1 trillion pay deal draws ire of labor unions, others as shareholder vote nears

Tesla critics hope to block the stratospheric compensation proposed for CEO Elon Musk but face an uphill fight.

Investors in the electric vehicle maker will decide on November 6 whether to approve the pay package that is potentially worth $1 trillion – likely the largest-ever CEO compensation agreement. Tesla’s board is pushing for shareholders to approve the plan, with Chair Robyn Denholm warning on Monday that Musk could leave if the deal is rejected.

Meanwhile, longtime skeptics of the company’s corporate governance, including Democratic U.S. state leaders and union officials, have launched a campaign to vote down the offer. Several have tried and failed to block earlier record payouts to Musk, including his $56 billion compensation plan for 2018 that investors reapproved last year amid legal challenges that remain.

The critics hope the results this time will be different, and also aim to reject all three Tesla directors who are up for reelection.

“The idea that another massive equity award will somehow refocus a man who is distracted is both illogical and contrary to the evidence,” Democratic New York State Comptroller Thomas DiNapoli, a frequent doubter of Musk, said on Monday. DiNapoli controls the vote of 3.3 million shares in Tesla through the state’s pension retirement system, or 0.1% of the company. “This is not pay for performance. It is pay for unchecked power,” he said.

He and others also worry that the deal would consolidate Musk’s control of the automaker and revive what New York City Comptroller Brad Lander called “the era of robber barons.” Lander spoke with DiNapoli on a webinar about Tesla’s shareholder meeting on Monday. New York City’s retirement plans held around 5 million Tesla shares as of April.

“Tesla is basically asking shareholders to relinquish having a meaningful voice in the company,” said Tejal Patel, executive director of the union-affiliated SOC Investment Group. It advises union pension plans that it said together hold fewer than 1% of the EV maker.

Although top proxy advisers recommend voting against the pay, even Tesla skeptics say they face a tough battle as U.S. Republican politicians shift power from investors to corporate leaders.

Ann Lipton, a University of Colorado law professor, said that many investors also will want to keep Musk happy. “Asset managers that believe they may have opportunities to invest in his other ventures – like xAI or SpaceX – may also want to stay in his good graces,” she said.

A Tesla representative declined to comment for this article.

POLITICAL DIVIDE OVER MUSK PAY ISSUE

Two of Tesla’s three largest outside investors, BlackRock (BLK.N), opens new tab and State Street (STT.N), opens new tab, both declined to comment through their press teams. A Vanguard representative did not respond to questions. Musk’s new pay plan, Item 4 on the ballot, must win a majority of shares entitled to vote on the proposal, including his own, in order to be approved.

A relatively high percentage of Tesla shares are held by retail investors, who tend to back management but often do not vote. Musk has the backing of legions of fans on his social media platform X, like Alexandra Merz, a self-described “Fangirl of Elon” and “Fierce Tesla retail shareholder advocate” who posts as @TeslaBoomerMama to her 209,000 followers.

Merz said via text message that she supports Musk’s pay package, which she said “challenges Elon to grow Tesla’s capitalization by nearly $7.5 trillion and achieve ambitious operational milestones” such as delivering robotaxis and AI robots, “ensuring that his compensation is tied to transformative value creation.”

To some extent, arguments about Musk’s pay may divide along political lines. Democrats DiNapoli, Lander, Massachusetts Treasurer Deb Goldberg and others have come out swinging against the compensation while the largest pension fund in Florida, which is run by Republicans, has said it will support the plan.

The largest plan in another Republican-led state, the Texas Teacher Retirement System, has not yet disclosed how it will vote at Tesla.

Asked about its vote, an official for the Florida State Board of Administration cited a recent securities filing that states Musk’s new award aligns pay with “ambitious, measurable milestones that benefit all shareowners” and contains governance safeguards.

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(This story has been corrected to show that the Teacher Retirement System of Texas has not yet disclosed how it will vote at Tesla, instead of saying that the TRS had supported the CEO compensation, in the 2nd bullet and paragraph 16)