Tesla’s CEO Elon Musk just got approval for an incentive-based pay package that’s worth up to $1 trillion. Even though Tesla’s board insists on the merit of this plan, it is currently under a very strong challenge from several investors and watchdogs. Tesla’s board spent seven months considering the proposal. Perhaps the structure of the compensation, which is performance based, was intended to tie Musk’s pay to the company’s success, particularly in autonomous vehicles and humanoid robotics, two ambitious goals that the company has pursued. Its reception among shareholders remains uncertain.
Tesla has even taken to running digital ads to drum up support for the pay package. These ads are meant to convince investors that there are no downsides to Musk’s outrageous compensation plan. The initiative is highlighted by a signature collection campaign on Votetesla.com. It features letters of support from board members Robyn Denholm and Kathleen Wilson-Thompson that highlight Musk’s rare leadership talents. They assert that he “singularly possesses the leadership characteristics necessary to realize its long-term mission.”
Despite these endorsements, significant opposition has arisen. New York State Comptroller Thomas DiNapoli has urged stakeholders to reject the pay package, reflecting concerns about corporate governance and accountability. Other prominent investors like BlackRock and State Street have been up in arms. This last group is home to Norway’s sovereign wealth fund and CalPERS, the largest public pension fund in the United States.
Proxy advisers Glass Lewis and Institutional Shareholder Services (ISS) have sided with critics, recommending investors vote against Musk’s compensation deal. Matthew Kotchen, an expert in corporate governance, articulated a common sentiment among opponents: “The role of a board is to have fiduciary responsibility to shareholders and not to be advocating for a CEO.”
Tesla critics such as Ross Gerber are already attacking Tesla’s advertisement expenditures. They agree it’s a head-scratcher, largely because of the many reports that the company is having trouble selling cars. Gerber remarked, “What’s amazing to me is a company struggling to sell cars spends money on advertising to sell a pay package.” He pointed out that Tesla needs to change its tune and get refocused on what got the company started — selling electric vehicles.
This irony that surrounds Musk’s controversial compensation proposal is compounded by its earlier rejection by a Delaware judge back in 2024. This decision raised questions about the appropriateness of such an astronomical salary for a CEO, even one as high-profile as Musk.
Elon Musk, who as of last month is officially the world’s first known half-trillionaire, has sought to dismiss worries about his pay package. Moreover, he’s made it clear often enough that his main interest is in keeping control of Tesla’s future. “The fate of Tesla could affect the future of civilization,” he stated, underscoring his belief in the company’s potential impact on global issues.
As this discussion continues to play out, one thing is becoming clear—perspectives on Musk’s leadership are all over the map. While some see him as a visionary capable of delivering bold innovations, others view him as a polarizing figure whose recent actions could harm the brand’s reputation. “He’s become a more polarizing figure over time,” Jessica Caldwell noted, yet she acknowledged that many still believe in Musk’s ability to realize unconventional ideas.