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 by way of.
Final 12 months, Tesla rallied 1000’s 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 an additional vote on Nov. 6 that will 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 by way of 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 objectives within the plan, he’ll have introduced Tesla to a market cap of $8.5 trillion and his stake can be price greater than $1 trillion. A lot of the playbook for 2025 is just like 2024: a slick investor web site, a bevy of posts and engagement on X about how traders can vote shares on particular brokerage platforms, and even a particular 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 may vote on-line, by mail, by QR code or by cellphone@Tesla_Optimus can present you the way pic.twitter.com/OM5UwtkJWx— Tesla (@Tesla) October 6, 2025
Tesla is clearly dedicating sources to speaking with its particular person retail traders and informing them about the way to 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 12 months, this 12 months’s vote to approve Musk’s new award isn’t almost as doubtful because it was in 2024, he stated. Plus, Tesla has the identical playbook to work from this 12 months.
“The results of 2024 offers a really sturdy clue about how 2025 will work out—and that handed with 72% of voters supporting it, and that’s fairly snug,” Levin stated. “This 12 months, it’s form of a model of the identical factor: a comp plan going ahead with these insane, formidable objectives, and persons are fantastic with that and don’t thoughts him being a trillionaire.”
Hundreds of retail traders and Tesla loyalists have pledged their assist 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 purple 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 can be disastrous for an financial 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 way in which wherein the pay package deal is form 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 in opposition to 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, known as Musk’s pay “extreme,” and stated it “waters down the holdings of different shareholders, and provides a captive board unwarranted discretion.” DiNapoli stated he plans in coming weeks to foyer different traders to vote in opposition to the plan and all administrators with reelection bids on the board.
The vote shall 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 try to observe swimsuit,” Montoya stated. “It is a precedent that may very well be damaging to our financial system, not simply right now and tomorrow however in our youngsters’s future.”
Two compensation proposals at Tesla
The Tesla assembly agenda consists of investor votes on 14 proposals, however the two which might 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 may even replenish the fairness pool of 60 million shares out there for workers and administrators that firms sometimes 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 12 months comes after a Delaware decide rescinded Musk’s earlier moonshot award in January 2024, a call 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 monumental victories for the EV maker, though the identical Delaware decide 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 inventory valued at about $24 billion. Musk’s proposed 2025 award entails the CEO hitting each market capitalization and operational objectives that might 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 might 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 improvement of a framework for long-term CEO succession,” one of many provisions states. All instructed, Musk might change into the world’s first trillionaire and he would maintain 28.8% of Tesla if he hits all of the objectives within the moonshot plan. He would additionally change 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 maintaining Musk centered on Tesla and motivated to develop the corporate.
“In gentle of the AI expertise wars, Tesla’s inner efforts to develop and broaden its product choices throughout the AI business, the absence of a complete plan to deal with the compensation that is still excellent for Musk’s previous efficiency, and the dearth of any go-forward incentive to encourage Musk to maintain his focus geared toward Tesla lengthy sufficient to realize significant outcomes that can rework Tesla over the long-term, we consider there’s a urgent must retain and incentivize Musk instantly,” the board instructed traders final month.
Pension funds struggle again
Of their criticisms, pension funds and Democratic state fiduciaries are taking goal 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 be sure that he stays centered on Tesla.
“In our view, the board’s failure to restrict Mr. Musk’s exterior endeavors whereas rewarding him with unprecedented pay packages for less than 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 might 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 12 months 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 in opposition to the three administrators up for reelection this 12 months: Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson.
Maryland Comptroller Brooke Lierman instructed Fortune her issues about Tesla as a fiduciary have been primarily based on the board’s governing monitor document and the dearth of accountability by administrators overseeing Musk in his position as CEO.
“That is a type of circumstances the place anyone 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 converse 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 document with particular person holders.
FGS World, 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. That means, there isn’t any majority-of-minority requirement, a company governance mechanism the place a transaction or proposal needs to be permitted by a majority of shareholders who should not concerned within the transaction. Presently, 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.
In response to FactSet, retail shareholders equate to roughly 34% of excellent shares. Final 12 months’s ratification vote noticed 72% of all votes forged in approval of his pay, which excluded shares linked to Musk and his brother.
Given the extent of insider management plus Tesla’s command over its retail base, proxy advisory corporations 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 prematurely, however they might not be a lot of a problem even when they out of the blue reverse course on Musk’s pay this 12 months versus final 12 months.
Nonetheless, Musk is unlikely to go away something to probability, stated Levin, given his possession stake in Tesla.
And if Musk left Tesla it could be horrible for traders; the inventory would possible instantly plummet. “Perhaps it’s a danger this board doesn’t wish to take,” stated Levin. “However I feel the price of avoiding that danger is method 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.
