Proxy advisory firm Institutional Shareholder Services has urged Tesla shareholders to reject a compensation plan that could award Elon Musk over $1 trillion in shares over the next decade. The plan, set for a vote on November 6, aims to retain Musk's focus on Tesla but lacks mechanisms to ensure his attention amid his other ventures. Opponents argue it dilutes shareholder value and features vaguely defined goals.
Tesla's proposed pay package for CEO Elon Musk, scheduled for shareholder approval on November 6, 2025, has drawn sharp criticism from Institutional Shareholder Services (ISS). The firm recommends rejection, stating the plan "doesn’t ensure that Musk’s ‘focus and time remain on Tesla’" despite its stated purpose of retaining him over other business interests. ISS highlights the "astronomical grant value," which could deliver Musk over 423.7 million shares and boost his ownership to 28.8 percent through 12 tranches tied to performance milestones. Tesla values the award at $87.8 billion, while ISS estimates $104.4 billion; full achievement could exceed $1 trillion if Tesla reaches an $8.5 trillion market cap, surpassing combined rivals in AI.
The milestones blend operational targets with market growth: delivering 20 million vehicles at a $2 trillion valuation, securing 10 million Full Self-Driving subscriptions, deploying 1 million AI robots, operating 1 million robotaxis, and achieving $400 billion in adjusted EBITDA. A Reuters report notes Musk could earn over $50 billion by meeting just a few easier goals, without revolutionizing Tesla's business. ISS warns the structure "locks in extraordinarily high pay opportunities over the next ten years," potentially undermining full goal pursuit and limiting board flexibility for future adjustments.
Tesla defended the plan in an X post, accusing ISS of missing "fundamental points of investing and governance" and ignoring prior shareholder approvals of similar awards. Background includes Musk's 2018 package, voided by a Delaware judge in January 2024 due to board conflicts; a re-approval vote failed in court. Tesla's relocation to Texas now allows Musk and his brother Kimbal to vote their shares.
University of Colorado Law School professor Ann Lipton predicts approval, citing Musk's enhanced voting power: "I strongly expect that all of these proposals are going to go Tesla’s way."
A letter from the American Federation of Teachers, state treasurers from Nevada, Massachusetts, and New Mexico, and comptrollers from New York City and Maryland echoes concerns. It criticizes vague goals—such as robot delivery that could include third-party products—and Musk's overcommitment to xAI, SpaceX, Neuralink, Boring Company, and the US Department of Government Efficiency (DOGE), which it says harms Tesla's performance and brand. The letter argues the board's failure to limit outside roles while offering unprecedented pay indicates a lack of independence, jeopardizing shareholder value.