Tesla's board proposed a $1 trillion compensation plan for CEO Elon Musk last month, but proxy adviser Institutional Shareholder Services urged investors to reject it. The recommendation adds pressure ahead of a November 6 shareholder meeting. ISS cited the plan's enormous size and potential for high payouts even with partial achievements.
Tesla unveiled the ambitious $1 trillion pay package for CEO Elon Musk in September 2025, describing it as the largest corporate compensation in history. The plan sets performance targets including a market capitalization of up to $8.5 trillion, delivery of 20 million vehicles, one million robotaxis, and $400 billion in adjusted core earnings. It aims to retain Musk for the next decade by rewarding company growth, which the board believes will benefit shareholders.
On October 17, 2025, Institutional Shareholder Services (ISS) recommended that investors vote against the package at the upcoming November 6 shareholder meeting. This marks the second consecutive year ISS has opposed Musk's compensation plans. The adviser highlighted the 'astronomical' size of the grant, valued by ISS at $104 billion compared to Tesla's estimate of $87.8 billion. ISS noted that the structure allows for 'extraordinarily high pay opportunities' over ten years, even for partial goal achievement, potentially diluting existing investors' stakes and limiting the board's flexibility for future adjustments.
The proposal follows a Delaware court ruling that voided Musk's previous $56 billion pay package. Unlike the 2018 deal, Musk can now vote his shares, giving him about 13.5 percent of Tesla's voting power, which could influence the outcome. Tesla Director Kathleen Wilson-Thompson defended the plan, stating in a video on X: 'Many people come to Tesla to specifically work with Elon, so we recognise that retaining and incentivising him will, in the long run, help us retain and recruit better talent.'
Tesla's shares rose 2.4 percent by 3:45 p.m. in New York following the initial unveiling, reflecting investor optimism about Musk's focus. Proxy advisers like ISS often influence major institutional investors holding large Tesla stakes. Tesla did not immediately comment on the ISS recommendation.