Tesla is weeks away from a monumental shareholder vote on CEO Elon Musk’s potential $1 trillion pay package deal at its annual investor assembly, and the EV-maker is pulling out all of the stops to push the measure via.
Final yr, Tesla rallied hundreds of mom-and-pop retail traders to vote their shares of inventory in favor of Musk’s billions in pay. Now, Tesla is teeing up retail holders for one more vote on Nov. 6 that may set Musk on the trail to changing into the world’s first trillionaire by granting him as much as 12% of Tesla’s excellent shares divided into 12 tranches via a restricted inventory grant. The primary tranche begins at $2 trillion and the ultimate tranche is $8.5 trillion. If he hits all of the targets within the plan, he’ll have introduced Tesla to a market cap of $8.5 trillion and his stake could be price greater than $1 trillion. A lot of the playbook for 2025 is just like 2024: a slick investor website, a bevy of posts and engagement on X about how traders can vote shares on particular brokerage platforms, and even a special video with Optimus humanoid robots explaining voting in between taking a sauna and overseeing platters of bagels and cream cheese.
Tesla’s Annual Assembly is developing on November 6 & we want your vote!
Voting is fast and simple – you’ll be able to vote on-line, by mail, by QR code or by telephone@Tesla_Optimus can present you the way pic.twitter.com/OM5UwtkJWx— Tesla (@Tesla) October 6, 2025
Tesla is clearly dedicating assets to speaking with its particular person retail traders and informing them about how you can vote, unbiased activist investor Michael Levin instructed Fortune, a feat that’s tough to perform within the U.S. Given how Tesla pulled it off final yr, this yr’s vote to approve Musk’s new award isn’t almost as unsure because it was in 2024, he stated. Plus, Tesla has the identical playbook to work from this yr.
“The results of 2024 provides a really sturdy clue about how 2025 will work out—and that handed with 72% of voters supporting it, and that’s fairly comfy,” Levin stated. “This yr, it’s type of a model of the identical factor: a comp plan going ahead with these insane, bold targets, and individuals are advantageous with that and don’t thoughts him being a trillionaire.”
Hundreds of retail traders and Tesla loyalists have pledged their help in favor of Tesla and Musk’s stratospheric new pay plan, however a rising coalition of pension funds and Democratic state fiduciaries are talking out about what they see as crimson flags: a comp package deal that’s too giant, an absence of independence on the board, and the potential for different founders and controlling CEOs to observe in Musk’s footsteps. The latter could be disastrous for an economic system that’s already tilted too favorably within the course of billionaires like Musk whereas workers writ giant are battling inflation and lackluster pay raises, sources stated.
“It’s not solely the magnitude, it’s the best way by which the pay package deal is type of a ransom geared toward shareholders,” New York Metropolis Comptroller Brad Lander instructed Fortune. “It’s a megalomaniacal journey of weird proportions that’s all about Elon’s ego and never in regards to the monetary well being of the corporate or its stakeholders and shareholders.”
Lander, who signed a letter with different traders urging shareholders to vote towards Musk’s pay plan and to oppose the reelection of three Tesla board members, oversees greater than a $1 billion invested in Tesla on behalf of New York Metropolis’s pension funds.
Equally, New York State Comptroller Thomas P. DiNapoli, who oversees about $1.4 billion invested in Tesla on behalf of the state’s pension funds, called Musk’s pay “extreme,” and stated it “waters down the holdings of different shareholders, and offers a captive board unwarranted discretion.” DiNapoli stated he plans in coming weeks to foyer different traders to vote towards the plan and all administrators with reelection bids on the board.
The vote might be a pivotal second—not only for Tesla, however for all those that oversee invested property on behalf of shareholders and retirees, New Mexico State Treasurer Laura Montoya instructed Fortune.
“If we don’t maintain them accountable you’re going to have so many others who’re going to attempt to observe swimsuit,” Montoya stated. “This can be a precedent that might be damaging to our economic system, not simply right now and tomorrow however in our youngsters’s future.”
Two compensation proposals at Tesla
The Tesla assembly agenda contains investor votes on 14 proposals, however the two which can be keenly related to Musk’s compensation embrace a proposal to approve his 2025 CEO efficiency award, and a second proposal that would come with the creation of a particular reserve of 208 million fairness shares for Musk. The vote authorizing extra shares will even replenish the fairness pool of 60 million shares obtainable for workers and administrators that firms usually use to compensate executives.
“All of the motion is in these two proposals,” stated Levin, who holds small funding in Tesla and plans to oppose the pay proposals.
The pay plan up for a vote this yr comes after a Delaware choose rescinded Musk’s earlier moonshot award in January 2024, a choice that prompted Tesla to carry an investor vote to ratify his pay package deal a second time in 2024 and to authorize a transfer from being included within the state of Delaware to Texas. The 2024 ratification vote and the transfer to Texas have been huge victories for the EV maker, although the identical Delaware choose rescinded Musk’s pay package deal a second time following the vote.
Since then, the Tesla board has given Musk an interim award of 96 million shares of restricted stock valued at about $24 billion. Musk’s proposed 2025 award includes the CEO hitting each market capitalization and operational targets that would probably see Tesla attain a market cap of $8.5 trillion if Musk efficiently unlocks all 12 tranches. He’ll have to stay round at Tesla for at least 7.5 years and as much as 10 years for his shares to vest.
The board claimed throughout negotiations that Musk “raised the likelihood that he could pursue different pursuits” if he doesn’t receives a commission for his previous work at Tesla and obtain not less than a 25% voting curiosity within the firm. The brand new award requires him to “take part within the board’s growth of a framework for long-term CEO succession,” one of many provisions states. All instructed, Musk may turn into the world’s first trillionaire and he would maintain 28.8% of Tesla if he hits all of the targets within the moonshot plan. He would additionally turn into the primary and solely CEO to hit a moonshot hat trick—three back-to-back pay packages.
The Tesla board instructed traders the pay package deal is essential to holding Musk targeted on Tesla and motivated to develop the corporate.
“In mild of the AI expertise wars, Tesla’s inner efforts to develop and increase its product choices throughout the AI trade, the absence of a complete plan to handle the compensation that is still excellent for Musk’s previous efficiency, and the shortage of any go-forward incentive to encourage Musk to maintain his focus geared toward Tesla lengthy sufficient to attain significant outcomes that may rework Tesla over the long-term, we consider there’s a urgent have to retain and incentivize Musk instantly,” the board instructed traders final month.
Pension funds battle again
Of their criticisms, pension funds and Democratic state fiduciaries are taking intention not solely on the measurement of Musk’s potential pay package deal however the Tesla board, chaired by Robyn Denholm. Pension leaders have stated Denholm and the board are letting traders down by failing to correctly oversee and problem Musk when wanted and make sure that he stays targeted on Tesla.
“In our view, the board’s failure to restrict Mr. Musk’s exterior endeavors whereas rewarding him with unprecedented pay packages for under a part-time dedication strongly signifies an absence of true independence by administration and jeopardizes long-term shareholder worth,” states a letter from SOC Investor Group signed by a dozen fiduciaries and traders. “The board has permitted Mr. Musk to be overcommitted for years, permitting him to proceed as CEO whereas taking time-consuming management roles at his different firms, xAI/X, SpaceX, Neuralink, and Boring Firm.”
The letter famous that the extent of compensation paid to the Tesla board members may additionally compromise the board’s impartiality. Common comp paid to S&P 500 board members in 2024 was $327,096, the letter states. Denholm’s common compensation per yr has been $62 million. Denholm has repeatedly denied that her objectivity has been clouded by the wealth she’s made promoting Tesla inventory over time.
Nonetheless, some traders are planning to ship a message to the board by voting towards the three administrators up for reelection this yr: Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson.
Maryland Comptroller Brooke Lierman instructed Fortune her considerations about Tesla as a fiduciary have been primarily based on the board’s governing monitor file and the shortage of accountability by administrators overseeing Musk in his function as CEO.
“That is a kind of circumstances the place any individual has to say, ‘Sufficient is sufficient,’” stated Lierman.
The retail wildcard
Regardless of the organizing by pension funds, the battle to sway the vote is an uphill climb, though that’s no cause to not communicate out, famous Lierman. Tesla seems positioned to win approval of Musk’s new moonshot pay plan primarily based on Musk’s possession, the voting historical past of enormous institutional traders, and the corporate’s monitor file with particular person holders.
FGS Global, a method agency working with Tesla, confirmed to Fortune that shares owned by Musk—and his brother and board colleague Kimbal Musk—might be voted for the 2 key comp proposals. Which means, there isn’t any majority-of-minority requirement, a company governance mechanism the place a transaction or proposal must be authorised by a majority of shareholders who should not concerned within the transaction. At the moment, Musk holds about 20% of the corporate and Kimbal Musk holds about 1.5 million shares, lower than 1% of Tesla’s excellent inventory. As well as, giant institutional traders BlackRock and Vanguard maintain near 13% of Tesla between them, and each voted in favor of Musk’s pay ratification in 2024.
Based on FactSet, retail shareholders equate to roughly 34% of excellent shares. Final yr’s ratification vote noticed 72% of all votes solid in approval of his pay, which excluded shares related to Musk and his brother.
Given the extent of insider management plus Tesla’s command over its retail base, proxy advisory companies like ISS and Glass Lewis aren’t going to be a determinant even when they advocate traders oppose the pay proposals, stated Levin. Equally, BlackRock and Vanguard don’t disclose their votes upfront, however they might not be a lot of a problem even when they all of a sudden reverse course on Musk’s pay this yr versus final yr.
Nonetheless, Musk is unlikely to go away something to probability, stated Levin, given his possession stake in Tesla.
And if Musk left Tesla it will be horrible for traders; the inventory would possible instantly plummet. “Perhaps it’s a threat this board doesn’t need to take,” stated Levin. “However I believe the price of avoiding that threat is manner too excessive—it’s a trillion {dollars} of fairness.”
Tesla’s shareholder assembly is slated to happen on Nov. 6 at its headquarters in Austin, Texas.
