Proxy Advisers Rally Investors Against Musk Pay Package at Tesla

Proxy advisory firms Institutional Shareholder Services Inc. and Glass, Lewis & Co. are advising Tesla Inc. shareholders to vote against a proposed $1 trillion conditional stock award for CEO Elon Musk at the company’s annual general meeting on November 6.

The proposed compensation package would be awarded across 12 tranches, contingent on the company meeting certain market cap and operational milestones over the next decade, including increasing its market cap to $8.5 trillion, delivering 20 million vehicles, achieving 10 million full self-driving subscriptions and developing a CEO succession framework.

The company currently has a $1.3 trillion market cap, more than the combined value of almost all other major automakers. Tesla has sold about 7.9 million vehicles to date, as of the year’s second quarter, according to estimates.

If all milestones were met, Musk would be awarded 423.743 million shares across the multiple tranches—with a market value of $989.7 billion, according to ISS. In its report, ISS also estimated that Musk owns 19.8% of outstanding shares, which could increase to as much as 28.8% if all milestones are met, not including potential dilutive events.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

CIO is a unit of ISS Market Intelligence Media, which is owned by ISS and its parent company, ISS STOXX.

In a proxy report seen by CIO, ISS criticized Tesla’s lack of requirements to ensure Musk focuses on Tesla, as he currently runs numerous other companies, including SpaceX, NeuraLink, x.AI Holdings Corp. and the Boring Company.

In a post on social media, Tesla Board Chair Robyn Denholm wrote, “ISS and Glass Lewis have time and time again recommended against Tesla’s proposals designed to promote the sort of extraordinary growth we have enjoyed, and time and time again they have been proven wrong by both our shareholders’ votes and Tesla’s results.”

In 2018, Tesla’s board and shareholders approved a $56 billion compensation plan for Musk, which was opposed by both advisory firms. That pay package was voided by a judge twice in the Delaware Court of Chancery in 2024.

Musk then moved the company’s legal location to Texas from Delaware. The company’s appeal to overturn the Court of Chancery’s ruling that voided Musk’s 2018 pay package was heard by the Delaware Supreme Court on October 15.

“Tesla’s market capitalization is up 20x since shareholders approved the 2018 CEO performance award, which, it so happens, ISS and Glass Lewis opposed,” Denholm wrote on social media.

Large institutional investors, such as the California Public Employees’ Retirement System, the California State Teachers’ Retirement System and the New York City Office of the Comptroller, opposed the 2018 pay package.

A spokesperson for the New York City Retirement System said all five New York City pensions plan to vote against the proposal. The pension system has historically never voted with Tesla management. A spokesperson for CalPERS said it had not decided on the proposal.

On Tuesday, a coalition of labor unions launched a “Take Back Tesla” campaign, which aims to pressure institutional investors to vote against the compensation plan at Tesla’s annual general meeting next month.

“The Tesla board, instead of upholding basic governance standards, wants to green light an outrageous $1 trillion pay package for a CEO who has spent most of the year engaged in childish political brawls, rather than working to create shareholder value,” said American Federation of Teachers President Randi Weingarten in a statement. “To reward this destructive behavior with an obscene salary is a slap in the face—not only to the federal workers he’s fired, but to the retirees whose pensions are invested in Tesla stock. We urge shareholders to join with us and demand their state pension officials reject Musk’s money grab and confiscate the Tesla board’s rubber stamp.”