Tesla is urging shareholders to approve a new compensation package for CEO Elon Musk potentially worth $1 trillion, tied to ambitious market and operational goals. Proxy advisors ISS and Glass Lewis have recommended rejecting it, citing excessive dilution and governance issues. Musk has warned he might leave if the deal fails, highlighting his central role in the company's success.
The controversy centers on Tesla's proposed 2025 CEO Performance Award, unveiled last month, which could grant Musk up to 423 million shares—about 12% of the adjusted share count—if he achieves 12 milestones, including boosting Tesla's market capitalization to $8.5 trillion by 2035 and reaching $400 billion in adjusted EBITDA, a 26-fold increase from current levels. The package, designed to retain Musk for at least 7.5 more years, separates voting power from economic value and offers no guaranteed pay, with shareholders capturing about nine-tenths of the value created, according to Tesla Chair Robyn Denholm.
Proxy advisory firms have opposed the plan ahead of Tesla's November 6, 2025, annual meeting. ISS argued it 'locks in extraordinarily high pay opportunities over the next ten years' and reduces board flexibility, while Glass Lewis called it 'excessively dilutive,' estimating it could shrink existing shareholders' ownership by 11.3% and value the deal at $141.6 billion—higher than Tesla's $87.8 billion estimate. Glass Lewis also questioned board independence, referencing a Delaware court's earlier voiding of Musk's 2018 package due to ties between directors and the CEO, and raised concerns about Musk's focus amid his roles at SpaceX, xAI, X, and Neuralink.
In response, Musk posted on X: 'Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me.' Tesla's official X account criticized the advisors as using 'one-size-fits-all checklists' that ignore the company's 20-fold market cap growth since 2018, when they opposed the prior award. Denholm's letter emphasized the package as a 'strategic binding agreement' to align Musk with long-term goals like AI, robotaxis, and sustainable abundance, warning that his departure could shift Tesla from a high-growth tech stock to a low-growth automaker. Supporter Cathie Wood of ARK Invest predicted decisive approval despite the opposition.
