Tesla Shareholders Urged to Vote on $1 Trillion Compensation Package Ahead of November 6 Deadline

Tesla CEO Elon Musk has issued a direct appeal to shareholders, urging them to "vote your Tesla stock" ahead of a crucial November 6 decision on a new compensation package potentially valued at $1 trillion. The call to action comes amid significant debate and opposition from influential proxy advisory firms regarding the unprecedented size and structure of the proposed award.

The new compensation plan, introduced in September, aims to retain Mr. Musk's focus on Tesla for the next decade. It ties his full payout and increased voting power to the company achieving an $8.5 trillion market valuation and expanding its electric vehicle, robotics, and robotaxi businesses. If approved, this could significantly increase his ownership stake in the company to approximately 25%.

However, proxy advisory firm Institutional Shareholder Services (ISS) has recommended shareholders vote against the plan, citing "unmitigated concerns" about its magnitude and design. ISS argued that while the award is intended to retain Mr. Musk, it offers "no explicit requirements to guarantee this outcome," given his involvement in multiple other ventures such as SpaceX, Neuralink, and xAI. Tesla has countered this, stating on X that "ISS once again completely misses fundamental points of investing and governance."

This upcoming vote follows a contentious period regarding Mr. Musk's compensation. In June 2024, Tesla shareholders re-approved a 2018 pay package, then valued at $44.9 billion, which a Delaware judge had previously voided due to concerns about its approval process. That ruling is currently under appeal, adding a layer of complexity to the ongoing discussions about executive compensation at the automaker.

Prominent investor Cathie Wood, founder of ARK Invest and a long-time Tesla bull, has publicly supported the new package, predicting it will pass "decisively." She criticized proxy firms and index funds for their influence, stating, "Isn't it sad, if not damning, that institutional shareholders rely on proxy firms to tell them how they should vote?" Mr. Musk endorsed her comments on X.

The outcome of the November 6 vote is seen as critical for Tesla's future strategic direction and Mr. Musk's continued leadership, with the company's board suggesting that rejection could lead to reduced involvement from the CEO. Shareholders are being asked to weigh the potential for significant growth under Mr. Musk's continued motivation against concerns regarding the package's size and governance implications.