Musk gave his time to xAI, but asked Tesla for a trillion-dollar compensation.

Musk is currently devoting a significant amount of time to his newly founded artificial intelligence company xAI, while at the same time asking Tesla shareholders to approve a sky-high compensation plan aimed at ensuring his focus.

On Thursday, U.S. time, Tesla will announce the preliminary results of a key shareholder vote, with the main topic being Musk’s new compensation plan.

If passed, the plan will raise his shareholding from about 15% to 25% over the next decade, provided the company meets ambitious targets including selling one million Optimus humanoid robots and reaching a market value of $8.5 trillion.

However, according to media reports citing informed sources, several major Tesla investors have privately pressed company executives and board members in recent weeks, asking just how much energy Musk is devoting to Tesla, and whether the company has a CEO succession plan. Two influential proxy advisory firms have already recommended shareholders vote against the plan.

According to former executives and people who have worked with Musk, most of this summer, Musk was “holed up” at his newest startup xAI, working through the night attending meetings. He even began holding meetings with Tesla employees at xAI’s offices, even as Tesla faced two consecutive quarters of declining sales.

Trillion-Dollar Compensation and a “Part-Time” CEO

The Tesla board proposed this massive compensation plan in its September proxy statement.

Board chair Robyn Denholm, in an interview last week, said the board was not concerned about how Musk allocated his time. She said:

Other CEOs might enjoy playing golf; he enjoys creating companies, and those companies aren’t necessarily Tesla.

Denholm stated that the rigorous targets in the compensation plan would force Musk to dedicate his “time, effort, and energy” to Tesla. In meetings with major shareholders, she and other board members also admitted they cannot force Musk to work full-time for the EV maker, but insisted his focus on AI will ultimately benefit Tesla.

Musk himself said on the “All-In” podcast that he hopes shareholders approve the plan to ensure he maintains significant control as Tesla transforms into a robotics company. He said:

If I could be pushed out, I wouldn’t go build a robot army.

However, proxy advisory firms believe the plan will give Musk excessive equity, and have therefore suggested voting against it.

Tesla, xAI, and Conflicting Interests

The boundaries between Musk’s companies are becoming increasingly blurred.

Earlier this year, he integrated xAI with X (formerly Twitter). After SpaceX invested around $2 billion in xAI, the idea of involving Tesla in investment resurfaced. Over 140 shareholders have submitted proposals asking the Tesla board to approve an investment in xAI.

Although Musk claims the two companies have synergies in autonomous driving and the Optimus robot, some large investors are skeptical of this potential investment.

The Tesla board ultimately made no recommendations on the proposal. Board chair Denholm, in a media interview, tried to downplay the technological connection, saying the overlap between Tesla and xAI is “minimal,” and compared integrating Grok into Tesla cars to integrating third-party apps like Spotify.

Now, as the key vote approaches, Tesla investors face a core question: does approving a sky-high compensation plan truly bring a CEO whose attention has clearly shifted back on track, or is it just paying for another “piece” of his ever-growing business empire?

Musk himself responded to the pay controversy on X, asking:

If the CEO isn’t me, which CEO from another automaker would you want to run Tesla?

Fully Devoted to xAI

After leaving the Trump administration’s Department of Government Efficiency (DOGE) in late May this year, Musk has been fully focused on xAI.

According to media reports citing insiders, at times he sleeps several days a week in xAI’s Palo Alto offices, which are right across the street from Tesla’s engineering HQ.

His work style has also changed, shifting from weekly all-hands check-ins to hours-long one-on-one conversations with employees.

During the intense weeks leading up to the July launch of xAI’s latest model Grok 4, many employees adjusted their schedules to accommodate Musk’s unusual working hours.

He personally oversaw the design of an attractive female chatbot called Ani, planned a giant data center for xAI in Memphis, and spent long hours in the office relaxing by playing his favorite video game, Diablo.

Meanwhile, Tesla’s core business is struggling. In the quarter ending June 30, car sales declined 13.5%, the second consecutive quarterly drop. Musk told investors on an earnings call:

We may go through a few tough quarters.

The Controversial Path of xAI Expansion

In order to help xAI’s Grok catch up rapidly with OpenAI’s ChatGPT, Musk has resorted to some highly controversial methods.

Reportedly, xAI requires its employees (mainly AI trainers) to sign an agreement granting the company “perpetual, global, royalty-free” rights to use their biometric data, such as faces and voices, to train virtual avatars. A follow-up notice clarified that providing such data is “a job requirement for advancing xAI’s mission.”

This data is used to develop Ani, the 3D virtual avatar. The bot is designed as a scantily clad, blonde-braided, anime-style character, interacting with users similarly to a dating simulator, which has attracted a large number of paid subscribers.

However, it’s reported that some employees who provided biometric data are uncomfortable with Ani’s sexual suggestiveness and stereotypical representation. Additionally, as Grok’s system was adjusted to increase engagement, it at one point produced antisemitic and violent content on the X platform, causing public outcry.

What’s more, according to company records seen by the media, xAI also instructed employees to use personal accounts to ask questions on rival platforms like ChatGPT, then use the answers to improve Grok.

Another project required employees to create personal accounts and scrape data from AI website companies Replit and Bolt. A spokesperson for Replit said this behavior violates their terms of service.

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