Elon Musk is facing mounting backlash as proxy advisers and major investors urge Tesla shareholders to reject his proposed $1 trillion (£744 billion) compensation plan, warning the package threatens corporate oversight and could entrench his control.
The dispute has erupted ahead of the company’s annual meeting on 6 November in the US, after Institutional Shareholder Services (ISS) and other bodies issued negative guidance.
The pushback comes as Tesla’s board defends the scheme, arguing it links pay to performance and ensures Musk’s commitment to the company.
Investor Fury Over ‘Excessive’ Deal
Institutional Shareholder Services (ISS) has recommended that Tesla investors vote against Musk’s colossal pay package, describing it as ‘excessive’ and insufficiently tied to safeguards for shareholders.
The plan would grant Musk hundreds of millions of shares contingent on achieving aggressive performance goals over the next decade.
ISS cautions that the magnitude and structure of the award reduce the company’s flexibility to adjust future compensation, as reported by the New York Post.
Tesla’s board, led by Chair Robyn Denholm, has urged investors to support the package, arguing that Musk’s vision and leadership justify exceptional reward.
The company also criticised ISS’s guidance, accusing it of offering direction without risk exposure.
$1 Trillion ‘Power Grab’ Raises Governance Alarms
Critics warn the proposal is not merely about compensation but about consolidating control. Corporate governance analysts argue that the structure of this grant, particularly the partial payout possibility, functions as a de facto power grab.
One earlier Musk pay package, valued at about $56 billion (£41.7 billion), was invalidated by a Delaware court in 2024, which found the process lacked fairness and board independence.
That precedent offers both a legal backdrop and cautionary tale for the current package.
Observers note that Musk’s voting power under the new plan could reach about 13.5%, giving him a significant margin to sway outcomes, a change from prior structures.
Shareholders Divided as Vote Approaches
The investor community is split. Some long-term loyalists believe Musk’s contributions entitle him to a generous compensation package, particularly given Tesla’s performance under his leadership.
Others, from state treasurers to asset managers, have formed coalitions urging opposition.
A coalition including SOC Investment Group and treasurers from states such as Nevada, New Mexico and Connecticut has formally urged investors to vote against the plan and to oppose the re-election of some board members.
Their letters argue the board’s fixation on retaining Musk is delaying accountability and oversight.
Because Tesla’s shareholder base includes many retail investors, the final vote may hinge on turnout and persuasion efforts.
Tesla Board Defends Musk’s Record
In its filings, Tesla maintains that Musk will receive no cash salary or bonus; his reward derives solely from hitting performance goals tied to value creation.
The board emphasises that the plan aligns Musk’s incentives with shareholder returns and ensures he remains committed to Tesla amid his other ventures.
Tesla has pushed back on criticism by accusing ISS and others of issuing advice without any stake in the outcome.
In a separate public statement, Tesla reaffirmed that the metrics are ambitious and that Musk would literally earn nothing if they are not met.
Next Steps Before Shareholder Meeting
The shareholder vote is scheduled for 6 November, at which time investors will decide not only on Musk’s pay package but also on the election of key board members.
ISS’s counsel is expected to influence several institutional investors, including pension and mutual funds.
If the proposal is rejected, it would represent a rare public defiance of Musk, and potentially force Tesla’s board to propose an entirely new compensation scheme. If passed, the structure could shift control dynamics at Tesla for the next decade.
Originally published on IBTimes UK
