Tesla Prepares Successors Amid Musk’s Exit Threat Over $1 Trillion Pay Vote

Tesla Inc. is gearing up for a potential leadership transition amid uncertainties surrounding CEO Elon Musk’s $1 trillion compensation package. This shift could be triggered if shareholders reject Musk’s pay proposal during the upcoming shareholder meeting on November 6.

Tesla’s Leadership Transition Plans

Robyn Denholm, Tesla’s Board Chair, indicated that the company is ready for an “orderly transition” in case Musk steps down. Such a transition would likely involve promoting internal candidates, although the possibility of hiring from outside the company remains open.

Shareholder Meeting Insights

The November 6 meeting will see investors voting on Musk’s unprecedented pay plan. This proposal is designed to align compensation with key milestones in market value, robotics, and artificial intelligence (AI) development. Denholm expressed that should the plan fail, Musk may reduce his engagement with Tesla to focus on other ventures, such as SpaceX or xAI.

Investor Engagement Efforts

• The Tesla board is actively engaging with institutional investors.
• Key board members, including Denholm, James Murdoch, and Jack Hartung, are meeting with major investment firms like Vanguard, BlackRock, and State Street.
• Proxy advisers ISS and Glass Lewis have recommended opposing Musk’s pay package.

Tesla’s Strategy and Stock Performance

In an attempt to rally support for Musk’s compensation plan, Tesla showcased its Optimus humanoid robot at the Nasdaq exchange in New York. The event included the distribution of branded candy to attract attention.

Despite the uncertainty regarding the compensation vote, Tesla’s shares have performed well recently, rising by 2.9 percent. Shares closed at $460.55 on Monday, with an after-hours trading value of $460.03, reflecting a minor increase.

Future Leadership Considerations

Denholm reassured stakeholders about having a “Plan B” if the compensation proposal fails, citing a strong internal leadership team. Tom Zhu, the global production chief, is highlighted as a potential leader. Additionally, the board is contemplating a co-leadership model if necessary.

AI Investments on the Ballot

Another item for discussion at the meeting involves a nonbinding vote on potential investments in Musk’s AI company, xAI. Denholm clarified that Tesla has not yet invested in xAI and emphasized that any future investment would be subject to formal review if approved by shareholders.