Tesla is vigorously advocating for shareholders to endorse a monumental $1 trillion performance-based compensation plan for CEO Elon Musk, with a pivotal vote scheduled at Thursday’s annual general meeting. The proposal has ignited fierce debate, drawing opposition from major institutional investors and advisory firms who argue it is overly generous and could dilute shareholder value.
The electric vehicle giant Tesla is in the midst of an intense campaign to secure approval for Elon Musk’s proposed $1 trillion pay package, which is set to be voted on at the company’s annual shareholder meeting in Austin, Texas. Tesla has launched digital advertisements and a dedicated website, votetesla.com, featuring board members extolling Musk’s leadership and the company’s future under his guidance. This aggressive push underscores the high stakes involved, as the outcome could significantly influence Tesla’s trajectory and Musk’s continued involvement with the company.
The compensation plan is not a traditional salary but a performance-based award that grants Musk 423.7 million new shares if he achieves specific targets, including raising Tesla’s market valuation from approximately $1.4 trillion to $8.5 trillion over the next decade. Additionally, Musk must oversee the commercial deployment of one million self-driving “Robotaxi” vehicles, an ambitious goal given the technology’s current challenges. If successful, this would increase Musk’s stake in Tesla from nearly 16% to over 25%, potentially making him the world’s first trillionaire with a net worth exceeding $2 trillion.
However, the proposal faces substantial resistance from key shareholders and proxy advisory firms. Norway’s sovereign wealth fund, the world’s largest national wealth fund and Tesla’s seventh-largest investor, announced it will vote against the package, citing concerns over its size, potential dilution of shares, and insufficient mitigation of key person risk. Similarly, influential advisers Glass Lewis and Institutional Shareholder Services have recommended rejection, labeling the award excessive and not in the best interests of shareholders.
Other major institutions have joined the opposition, including the California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the U.S., and the American Federation of Teachers. New York State Comptroller Thomas DiNapoli has urged investors to reject the re-election of certain board directors, accusing them of failing to provide independent oversight. This collective pushback highlights growing scrutiny over corporate governance at Tesla and Musk’s polarizing leadership.
Musk himself has heightened the drama by using his social media platform X to rally support, stating that Tesla’s future “could affect the future of civilization” and sharing endorsements from high-profile figures like Dell Technologies’ Michael Dell and Ark Invest’s Cathie Wood. His brother, Kimbal Musk, a Tesla board member, also voiced strong support, emphasizing Elon’s unique capabilities. Conversely, critics like Ross Gerber of Gerber Kawasaki argue that Tesla should focus on core business issues, such as reversing declining sales, rather than on Musk’s compensation.
The controversy occurs against a backdrop of Tesla’s operational challenges, including a 13% drop in global vehicle deliveries in the first half of 2025 and slumping sales in key European markets. While recent quarterly results showed a 7% rise due to expiring U.S. tax credits, the company faces potential slowdowns as incentives end. These struggles have fueled debates over whether Musk’s focus on autonomous vehicles and robots distracts from essential automotive operations.
As the vote approaches, Tesla may rely heavily on its large base of retail investors, who traditionally support Musk, to counter institutional opposition. Analysts like Morgan Stanley’s Adam Jonas describe the decision as one of the most critical in Tesla’s history, with a “distinct possibility” the package may not pass. The outcome will not only shape Musk’s fortune but also test shareholder confidence in his leadership amid increasing polarization and brand damage concerns.
Ultimately, the trillion-dollar question remains whether shareholders will align with the board’s vision or heed the warnings of advisers and major funds. The result could redefine executive compensation norms and influence Tesla’s ability to innovate and compete in the rapidly evolving electric vehicle and technology landscapes.