TLDR
- Tesla shareholders vote Thursday on Elon Musk’s compensation package potentially worth up to $1 trillion if all performance targets are met
- Norway’s $1.9 trillion sovereign wealth fund and California’s CalPERS pension fund oppose the package, citing excessive size and dilution concerns
- Musk currently holds 13% of Tesla and can vote his 15% stake under Texas law, potentially securing approval
- Three board members including compensation committee members face reelection amid criticism over their own excessive compensation
- Shareholders also vote on whether Tesla should invest in Musk’s AI company xAI, with Glass Lewis recommending against it
Tesla shareholders face a critical decision Thursday at the company’s annual meeting in Austin, Texas. The main item on the agenda is CEO Elon Musk’s proposed compensation package.
#Tesla $TSLA shareholder vote on Elon Musk's $1T comp package is TOMORROW (Nov 6)! Key update: Charles Schwab flipped to YES after retail pressure. Norway's NO added drama, but retail support strong. As of Nov 5: #ElonMusk pic.twitter.com/MZA1Ps0fFw
— Dark Stone Capital (@DarkStoneCap) November 5, 2025
The package could be worth up to $1 trillion if Musk hits all performance targets. It represents the largest executive pay proposal in corporate history.
Norway’s $1.9 trillion sovereign wealth fund announced it will vote against the package. The fund holds a 1.2% stake in Tesla.
“While we appreciate the value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk,” the fund stated.
California’s CalPERS pension fund also opposes the compensation plan. Both institutional investors cite governance concerns and excessive dilution of shareholder value.
Musk currently owns 13% of Tesla after selling shares in recent years. His 2018 pay package remains tied up in Delaware courts following a shareholder lawsuit.
A judge previously ruled that package an “unfathomable sum” resulting from negotiations with conflicted directors. The Delaware Supreme Court is reviewing Tesla’s appeal.
The Trillion-Dollar Proposal
The new package would grant Musk 12 tranches of stock options tied to aggressive performance targets. The options would vest over seven and a half years.
If approved, Musk would reach around 25% ownership of Tesla. He claims this level of control is necessary for him to remain with the company.
“My fundamental concern is if I go ahead and build this enormous robot army, can I just be ousted at some point in the future?” Musk said during last month’s earnings call.
The pay package ties payouts to Tesla reaching an $8.5 trillion market value within a decade. The company’s current market cap stands at $1.5 trillion.
Some shareholders believe the compensation is justified if Musk delivers on his promises. Nancy Tengler, CEO of Laffer Tengler Investments, supports the package.
“If the stock is going to go up sixfold, then I’m going to make a lot of money,” Tengler said. “Why do I care what kind of money he makes if he’s effecting the change and the vision?”
Critics argue the package is excessive regardless of performance. Brian Dunn, director of Cornell University’s Institute for Compensation Studies, testified against Musk’s 2018 package.
“We’re talking about a package that is just way beyond anything that resembles reasonableness in terms of compensation,” Dunn said.
Proxy advisers Glass Lewis and ISS both recommend voting against the proposal. They cite excessive dilution and lack of board independence.
Glass Lewis pointed out the board has broad discretion to approve stock tranches even if Musk misses targets.
Board Elections and xAI Vote
Three board members face reelection Thursday. Ira Ehrenpreis sits on Tesla’s compensation committee and the nominating committee.
Kathleen Wilson-Thompson serves on both committees plus the disclosure committee. Airbnb co-founder Joe Gebbia sits on the audit committee.
Glass Lewis recommends approving Gebbia but opposing Ehrenpreis and Wilson-Thompson. All three are expected to win reelection to three-year terms.
Earlier this year, Tesla directors returned $919 million in a settlement over excessive compensation from 2017 to 2020. Board chair Robyn Denholm and James Murdoch were among those directors.
“These directors were pulling down millions at grant value, and hundreds of millions in realized value,” Dunn said.
Shareholders also vote on whether Tesla should invest in Musk’s AI startup xAI. The company has raised substantial capital and competes with other major AI firms.
xAI’s Grok chatbot now appears in newer Tesla vehicles. Musk suggested an investment might make sense.
“If it was up to me, Tesla would have invested in xAI long ago,” Musk wrote on X.com.
Tesla’s board offers no recommendation on the xAI investment proposal. Glass Lewis advises against it, arguing shareholders should not make such operational decisions.
Musk can vote his 15% stake under Texas law, where Tesla reincorporated after leaving Delaware. This gives him potential control over the outcome.
Board chair Denholm warned shareholders last week that rejecting the pay package risks Musk leaving Tesla. “We run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision,” she wrote.
The meeting begins at 4 p.m. ET Thursday with votes expected to be announced shortly after.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
