Elon Musk’s $1 Trillion Tesla Pay Package Faces Heavy Criticism Ahead of Shareholder Vote
As Tesla prepares for a pivotal shareholder vote on November 6, intense scrutiny surrounds a compensation plan that could ultimately grant CEO Elon Musk more than $1 trillion—making it the largest executive pay package in corporate history. While Tesla defends the plan as necessary to retain Musk and maintain his focus on the company, a growing chorus of critics—including proxy advisory firms, state officials, and investor groups—are raising red flags about governance, fairness, and corporate oversight.
Proxy Advisory Firm Warns: No Guarantees Musk Will Focus on Tesla
Institutional Shareholder Services (ISS), a leading proxy advisory firm, has strongly recommended shareholders vote against the pay package. In a report released Friday, ISS argued the award lacks provisions that ensure Musk’s “focus and time remain on Tesla as opposed to his other ventures.” These include high-profile and demanding roles at SpaceX, Neuralink, xAI/X, and The Boring Company.
“The astronomical grant value,” ISS wrote, “could dilute value for existing shareholders and fails to justify further alignment of Musk’s interests with those of Tesla.” Notably, Musk already owns 19.8% of Tesla, raising questions about whether additional incentives are needed to motivate him.
The Numbers: Up to $1 Trillion in Potential Payout
Tesla’s proposed plan would grant Musk 423.7 million shares, contingent on meeting a series of ambitious performance goals. These include:
- Delivering 20 million vehicles
- Achieving a $2 trillion market capitalization
- Reaching 10 million Full Self-Driving (FSD) subscriptions
- Producing 1 million AI-powered humanoid robots
- Deploying 1 million robotaxis
- Generating $400 billion in adjusted EBITDA
Tesla valued the plan at $87.8 billion, while ISS calculated the real figure at $104.4 billion. But if Tesla reaches its ultimate market cap target of $8.5 trillion, Musk’s payout could exceed $1 trillion.
To achieve that, Tesla’s valuation would need to grow by $7.5 trillion, surpassing the combined market caps of leading companies in the AI and automotive sectors today.
Critics Say Pay Plan Rewards Partial Success, Lacks Accountability
ISS’s report is not the only voice of concern. A coalition of public officials—including state treasurers from Nevada, Massachusetts, and New Mexico, and comptrollers from New York City and Maryland—joined the American Federation of Teachers in a letter condemning the proposal. They argue the board has failed to ensure Musk’s full commitment to Tesla while offering what would be the highest CEO pay in history.
Among the criticisms:
- Vehicle delivery targets could be achieved even if annual sales decline.
- FSD goals do not require true autonomy or regulatory approval.
- AI robot milestones are so vaguely defined that Tesla could fulfill them by reselling products from other companies.
- Robotaxi targets do not require Tesla to have designed the vehicles or made the service profitable.
The letter also highlighted Musk’s controversial outside commitments—including his new role as head of the US Department of Government Efficiency (DOGE)—suggesting these endeavors may harm Tesla’s brand and long-term shareholder value.
Concerns Over Governance and Board Independence
Another sticking point is the independence of Tesla’s board, which was previously criticized in a 2024 Delaware court ruling that invalidated Musk’s 2018 pay plan. The judge cited troubling ties between Musk and several board members, casting doubt on their ability to act independently.
Tesla has since moved its headquarters to Texas, where governance laws differ. Under Texas law, Musk and his brother Kimbal—both major shareholders—will be allowed to vote on the pay plan. This was not permitted under Delaware law during the last vote, leading experts to predict the plan’s approval is now all but certain.
Legal expert Ann Lipton, professor at the University of Colorado Law School, told Financial Times, “They recommended against it before and the shareholders voted in favor, and this time Elon Musk gets to vote… I strongly expect that all of these proposals are going to go Tesla’s way.”
Tesla Fires Back at Critics
Tesla responded forcefully to ISS’s recommendation in a post on X (formerly Twitter), stating:
“ISS once again completely misses fundamental points of investing and governance. They recommended against compensation that shareholders have voted on twice before… Elon receives nothing unless shareholders win big.”
Tesla argues that the performance-based nature of the award ensures shareholders benefit alongside Musk, and that the package reflects the company’s long-term strategy to become a dominant force in AI, robotics, and autonomous vehicles.
A Risky Precedent?
Critics warn the sheer scale of the plan sets a dangerous precedent—not only for executive pay, but for the relationship between corporate boards and high-profile CEOs.
“This pay structure locks in extraordinarily high pay opportunities for years to come,” ISS wrote, noting that the board may find itself unable to adjust compensation levels even if company performance changes drastically.
The report also cautions that the value of each tranche could disincentivize Musk from achieving all goals, potentially leading to partial goal attainment that still results in multi-billion dollar payouts.
A Controversial Vote with Global Implications
The upcoming shareholder vote is about more than just Musk’s paycheck—it’s about the future of corporate governance, executive accountability, and investor influence in an era where tech visionaries command outsize power.
While many expect the proposal to pass—thanks in part to Musk’s own voting power—investors, regulators, and corporate watchdogs will be watching closely. The outcome may shape not only the direction of Tesla, but also how major corporations reward—and rein in—charismatic leaders in the age of AI and automation.
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