Elon Musk is actively campaigning to convince Tesla investors to support his proposed $1 trillion pay package, a move that has drawn significant attention and controversy. In a surprising intervention during Tesla's recent earnings call, Musk urged shareholders to approve the plan, emphasizing that it's not just about the money, but about maintaining sufficient voting control to effectively lead the company.
Musk's plea comes ahead of a crucial shareholder vote scheduled for November 6, 2025, which will determine the fate of the compensation package. The proposal would grant Musk up to 12% of Tesla's stock, potentially worth $1 trillion, if the company achieves ambitious targets, including an $8.5 trillion market capitalization and significant operational milestones over the next decade. Tesla's current market value is approximately $1.38 trillion.
However, the pay package faces strong opposition from influential shareholder advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis. These firms have recommended that investors reject the proposal, raising concerns about its unprecedented size, potential dilution of other shareholders' ownership, and the concentration of power in Musk's hands. ISS expressed "unmitigated concerns" regarding the magnitude and design of the award.
In response, Musk has lashed out at the advisory firms, branding them "corporate terrorists" for opposing the plan. He argued that these firms have made "many terrible recommendations in the past" that, if followed, would have been "extremely destructive" to Tesla's future. Musk stated he needs "mid-20s%" voting power to maintain influence over Tesla. He also added that he wants enough voting control to give him a strong influence, but not so much that he can't be fired if he goes insane.
Tesla's board of directors, however, is strongly advocating for the approval of Musk's compensation package. They argue that it is designed to incentivize Musk to continue driving Tesla's growth and innovation, emphasizing his crucial role in the company's success. Tesla's Chief Financial Officer, Vaibhav Taneja, has praised the board committee for structuring the award and emphasized that shareholders would only benefit if Tesla achieves substantial returns.
The debate over Musk's pay package has broader implications for corporate governance and executive compensation norms. It raises questions about the limits of executive rewards, the role of independent boards in negotiating pay, and the influence of proxy advisory firms.
This isn't the first time Musk's compensation has faced scrutiny. In 2024, a Delaware court invalidated Musk's original $56 billion compensation plan, citing concerns about the board's independence and the fairness of the process. Tesla's board awarded Musk an interim pay package valued at around $29 billion, contingent on him maintaining a key executive role.
Tesla's recent earnings report revealed disappointing profit margins despite record vehicle deliveries, adding another layer of complexity to the debate. Operating income dropped by 40% in the third quarter, reflecting challenges in the electric vehicle market. Costs are rising sharply for Tesla, with tariffs taking a more than $400 million toll on last quarter's results and operating expenses soaring 50% to $3.4 billion in the period.
As the November 6 vote approaches, both sides are actively campaigning to sway investors. The outcome will not only determine Musk's compensation but also significantly impact his control over Tesla's future.
