How Tesla's board changed its tack in pushing for Musk's latest $1 trillion pay package

Core Viewpoint - Tesla's recent communication to investors emphasizes the urgency of approving Elon Musk's $1 trillion compensation plan, framing it as essential for retaining his leadership and ensuring the company's growth potential [1][11]. Group 1: Compensation Plan Evolution - The board's initial 10-year compensation plan for Musk, valued at approximately $55 billion, was approved in 2018 but later rejected by a Delaware judge in 2024 [3]. - Following the rejection, Tesla attempted to reaffirm the plan, citing fairness and the need to honor commitments made to Musk [9]. - The 2025 proposal has shifted focus from fairness to the necessity of retaining Musk's vision and leadership, highlighting the potential loss of value for Tesla without him [11]. Group 2: Investor Communication Strategy - Tesla's chair, Robyn Denholm, has articulated that failing to provide Musk with adequate compensation could result in losing his "time, talent, and vision," which have been crucial for shareholder returns [2]. - The company has actively sought shareholder approval for the compensation package, employing advertisements and countdowns on its website to generate support [15]. - Despite opposition from institutional investors and proxy firms, Tesla's messaging has increasingly emphasized the alignment of Musk's compensation with shareholder interests and performance targets [14]. Group 3: Structural Changes in Compensation - The latest proposal allows Musk to vote with earned shares before they vest, enhancing his voting power compared to the previous stock options [12][13]. - Significant pay-for-performance measures are included in the new plan, aiming to address concerns regarding the size of the compensation by linking it to specific performance milestones [14]. - The board's independence and ability to monitor management remain points of contention, with ongoing skepticism about the governance structure [16][17].