Tesla is embroiled in a high-stakes battle over CEO Elon Musk‘s compensation. The company’s board, led by Robyn Denholm, is urging shareholders to approve a colossal $56 billion pay package for Musk, warning that his departure could be imminent if they don’t.

This is the second time shareholders will vote on Musk’s pay. An earlier attempt was struck down by a Delaware judge due to flaws in the approval process. Now, Tesla is launching an all-out campaign to secure a “yes” vote on June 13th.

Denholm argues that Musk is no ordinary CEO and Tesla is no ordinary company. Traditional compensation models won’t suffice for such a maverick leader, she insists. “Motivating someone like Elon requires something different,” Denholm writes in a letter to shareholders. This “something different” translates to a record-breaking pay package that would solidify Musk’s position as the highest-paid CEO ever.

But Denholm’s message carries a veiled threat. She suggests that without proper “motivation,” Musk might seek “other places” to devote his time and energy. This resonates with a concern lurking among many investors: Musk’s divided attention. His involvement in numerous ventures – SpaceX, The Boring Company, Neuralink, X (formerly Twitter), and xAI – raises questions about his commitment to Tesla, the very company that propelled him to fame and fortune.

Adding fuel to the fire, several proxy advisory firms have recommended rejecting Musk’s pay proposal, citing its sheer size and potential dilution of shareholder value.

However, early signs indicate Musk might get his way. A report by eToro suggests that over 80% of the already-cast votes (around 25% of total shares) favor the package.

This isn’t just about money, Denholm claims. Musk, already one of the world’s richest people, wouldn’t be financially strapped even if Tesla reneged on its 2018 commitment, she argues.

But the optics aren’t great. Denholm’s argument implies Musk needs the largest-ever CEO pay package as an incentive to stay at Tesla. This feeds into the narrative of a CEO potentially prioritizing personal gain over the company’s future.

There’s another layer to this complex situation. Musk, seeking greater control over Tesla (ideally a 25% stake), desires to push the boundaries of artificial intelligence and self-driving cars. He’s even threatened to spin off Tesla’s AI efforts into a separate entity if his demands aren’t met. (Musk currently owns around 13% of Tesla, having sold a significant chunk to finance his Twitter acquisition.)

The message to shareholders is clear, albeit delivered with heavy implication: Approve the pay package, or risk losing Musk’s leadership altogether. Denholm emphasizes the “commitment” made to Musk in 2018, suggesting that honoring it will not only retain him but also acknowledge his past achievements – a strategy aimed at motivating future value creation for shareholders.

Tesla’s June 13th shareholder vote will be a closely watched event. The outcome will determine not just Musk’s compensation, but potentially the future direction of the company itself.