Institutional Shareholder Services (ISS) has recommended that Tesla shareholders vote against a proposed $1 trillion stock award for CEO Elon Musk, citing concerns over its size and structure. The opposition comes amid Tesla's aggressive marketing campaign to secure approval for the package ahead of the November 6 shareholder meeting. Analysts suggest this could highlight risks to Tesla's current valuation, which appears overvalued by traditional metrics.
Tesla's board proposed the unprecedented $1 trillion compensation package for Elon Musk in September 2025, tied to milestones in stock performance and product development. Each milestone unlocks tens of billions of dollars in stock for Musk, making it the largest CEO award ever by multiple orders of magnitude. The package will be voted on at Tesla's shareholder meeting on November 6, 2025, alongside Proposal 3, which combines 60 million shares for all employees with 208 million shares reserved specifically for Musk, worth about $91 billion at current prices.
ISS, a leading proxy advisory firm for institutional investors, recently advised against the proposals, arguing they dilute shareholder value without sufficient safeguards. This follows a pattern: a prior $55 billion Musk pay package was ruled illegal by Delaware's Court of Chancery for misleading shareholders and excessive ties to Musk, then ratified by vote but voided again. In August 2025, Tesla granted Musk an interim $26 billion award using shares from the employee reserve, prompting criticism that it drained resources meant for the company's 120,000 workers.
To rally support, Tesla has launched ads on social media, Google, and TV—breaking its long-standing no-advertising stance. Videos feature employees like Kiyoko and Sarah, who credit Tesla stock for life milestones such as homeownership and family events, though critics say this conflates employee compensation with Musk's award. Tesla has also attacked opponents, including pension funds and ISS, via tweets claiming superior returns—99.1% stock rise over the last year and 15.8% year-to-date—compared to funds' 6.51%-13.3% annualized returns since 2018.
Valuation analyses underscore risks. Tesla scores 0/6 on standard checks, with a discounted cash flow model estimating intrinsic value at $140.62 per share versus current trading prices, implying a 212.4% premium. Its price-to-sales ratio stands at 15.75x, far above the peer average of 1.16x and industry 1.28x. Community narratives vary: a bull case sees fair value at $2,707.91 with 77% revenue growth, while a bear case pegs it at $322.21 with 18% growth, reflecting debates over Tesla's AI, robotics, and energy potential amid falling Cybertruck sales (down 63% year-over-year) and analyst underperform ratings.