Tesla shareholders will vote on Musk's compensation package.

Once again, Tesla (TSLA) chairwoman Robyn Denholm urged shareholders to approve CEO Elon Musk's unprecedented compensation package; this package could lead to the company losing $1 trillion, as Musk's threat to leave the company looms.

In a letter sent to shareholders on Monday morning, Denholm warned that if shareholders do not approve this plan, Tesla risks losing Musk's leadership. This package, announced at the beginning of September, will provide Musk with 12 large stock options based on aggressive targets, according to the board.

Denholm wrote, "If we fail to create a pay-performance plan that motivates Elon to achieve great successes, we risk losing him in a leadership role, and Tesla could lose the time, talent, and vision necessary to provide extraordinary shareholder returns."

Denholm suggested that if Musk were to leave, Tesla could experience "significant value loss" as Musk's leadership is essential for guiding the company in automotive, robotics, energy storage, and autonomous driving.

Denholm's letter comes at a time when independent advisory firms Glass Lewis and ISS argue that shareholders should not approve the recent pay package. These consulting firms claim that the award is excessive, harms shareholders, and was not given by an impartial board.

During Tesla's latest earnings call, Musk also responded to the advisory firms. "I'm not comfortable with building a robot army here, and I don’t want to be on the verge of getting kicked out because of ridiculous proposals from ISS and Glass Lewis. They are corporate terrorists,” he said.

Musk's 2018 compensation package came up in a lawsuit in Delaware; shareholder plaintiffs claimed they did not receive adequate information to properly evaluate the compensation awarded by the board. A judge agreed with this objection. The Delaware Supreme Court is reviewing Tesla’s appeal.

Musk and now Denholm argue that both previous and the newly proposed "compensation" plans are a way to keep Musk at Tesla and to increase his interest in the company’s success. It is stated that Musk must not sell his shares for at least 7.5 years and must meet a set of challenging targets to receive the full reward; these include raising Tesla's EBITDA to $400 billion (last year Tesla made a total of $16.6 billion) and achieving a market value of $8.5 trillion (currently Tesla is valued at $1.44 trillion).

Musk's critics argue that his foray into politics, leading the White House's DOGE commission, and supporting far-right politicians in Europe have undermined much of the goodwill Tesla has gained over the years and put the brand in crisis.

Still, despite the cancellation of Musk's previous package, analysts believe the new package will be approved by shareholders.

Wedbush analyst Dan Ives said in a note released last week, "We believe the company will vote on Musk's pay package at the shareholder meeting on November 6, and this will be accepted by a large majority, which will be critical in keeping Musk as the wartime CEO.”

In conclusion, Denholm stated that Musk is the only person capable of taking Tesla to the next level in terms of business and profit, while also providing societal benefits. "I strongly believe that Elon has the ability to drive us toward maximizing long-term shareholder value and social good," said Denholm.

Tesla’s shareholder meeting is scheduled for November 5. Shareholders have until 11:59 AM ET to cast their votes; the meeting will take place the following day.