In a crucial shareholder meeting this week, Tesla Board Chairperson Robyn Denholm stressed the importance of re-approving CEO Elon Musk's $46 billion pay package. Denholm emphasized that the vote was "not about the money" but rather about retaining Musk's dedication to the company. Denholm further warned that if Musk wasn't properly compensated, he might consider reducing his involvement with Tesla or even leaving the company altogether.

Denholm's plea comes after an earlier ruling by the Delaware Court of Chancery nullified Musk's pay plan in January 2024 due to a lawsuit filed by a shareholder. The court ruling criticized Denholm for her lax oversight and highlighted potential conflicts of interest among board members. It also noted that the pay plan was significantly larger than comparable compensation packages in the public market.

Tesla's board subsequently proposed relocating the company's state of incorporation from Delaware to Texas and reinstating the pay plan, which was initially valued at $56 billion but has since been evaluated at $46 billion. Shareholders have until June 13 to cast their votes, and early indicators show that more than 80 percent are in favor of Musk's pay package, despite some opposition from shareholders.

However, the pay plan and proposed move to Texas face another challenge in the form of a new lawsuit filed by shareholder Donald Ball. The lawsuit accuses Musk of using strong-arm tactics to gain approval for the plan and claims that he has diverted Tesla's AI resources, causing delays in the company's data center and AI infrastructure development.

Additionally, the lawsuit raises concerns over the Tesla board's lack of transparency regarding the potential tax implications of approving Musk's pay plan. It suggests that these implications could impact Tesla's pre-tax profits for the past two years.

As Tesla's annual meeting approaches, all eyes are on the shareholders and their decision regarding Musk's pay package. The outcome of the vote will not only determine the future compensation of one of the world's wealthiest individuals but also potentially affect Tesla's leadership and strategic direction.