Tesla’s board of directors is backing a $1 trillion pay package for CEO Elon Musk ahead of a shareholder vote scheduled for Thursday. The board calls this compensation plan a “critical inflection point” for the company’s future. The massive award is tied to Tesla achieving trillion-dollar market valuation milestones and hitting aggressive performance targets across multiple new business segments.
Tesla’s board views a $1 trillion Musk pay package as a critical inflection point tied to ambitious market valuation and performance targets.
However, significant opposition has emerged from major shareholders. Norway’s sovereign wealth fund announced it’ll vote against the proposal. The fund expressed concerns about the award’s enormous size and said the compensation structure fails to address “key person risk”—the problem of relying too heavily on one individual. The Norwegian fund previously opposed Musk’s $56 billion pay package in 2024 for similar reasons.
A coalition of institutional investors has also joined the opposition. The group includes the SOCK Investment Group, the American Federation of Teachers, and state treasurers from Nevada, New Mexico, Connecticut, Massachusetts, and Colorado. Controllers from Maryland and New York City also signed a formal letter urging shareholders to reject the plan. They argue the board is damaging Tesla’s reputation just to keep Musk at the company.
The board maintains the compensation structure is essential for keeping Musk as CEO and driving Tesla’s strategic vision forward. They contend that the ambitious targets require sustained market leadership in multiple new business segments.
Critics worry the structure concentrates too much risk on a single person’s performance. They point out that the proposal lacks provisions to address over-reliance on Musk’s involvement. Some also question whether the performance metrics truly connect to sustainable business operations rather than just stock price movements.
This marks Tesla’s second attempt at approving a massive Musk compensation package. The 2024 rejection partly led to this revised proposal. Shareholder advisory groups typically influence voting outcomes on contentious pay packages, though their stance on this particular proposal hasn’t been specified.
Tesla’s approach to executive compensation mirrors the company’s broader philosophy of fixed pricing across its business operations, from vehicle sales to service packages. The Thursday vote will determine whether Tesla’s shareholders approve this record-breaking compensation structure.