Tesla board chair explains what could happen if Elon Musk's pay package is rejected

Core Viewpoint - The upcoming shareholder vote on Elon Musk's $55 billion pay package is critical for Tesla, as the plan was previously invalidated by a Delaware judge due to Musk's influence over the board [1][2]. Compensation Plan Details - The original compensation plan, established in 2018, was valued at approximately $2.3 billion in stock-based compensation charges at that time [2]. - If the 2018 pay plan is rejected, creating a new plan with similar stock grants could cost around $25 billion in stock-based compensation today [2]. - The executive pay plan consists of a 10-year grant of 12 tranches of stock options, which vest upon Tesla achieving specific milestones [6]. Implications of the Vote - Tesla's board chair, Robyn Denholm, indicated that rejecting the pay plan could lead to increased costs or decreased motivation for Musk, which would not be favorable for shareholders [3]. - Denholm emphasized that ratifying the plan is the best option for shareholders, as alternatives would not be as beneficial [3]. - There is uncertainty regarding the validity of the pay plan even if shareholders approve it, as the Delaware court could still rule it invalid [3]. Shareholder Perspectives - There is a divide among shareholders, with some investment firms urging a vote against the pay package, while Tesla's board and key shareholders advocate for its approval [5]. - Musk's compensation is performance-based, relying on specific metrics defined in 2018, and he does not receive a salary [5].