URGENT UPDATE: Tesla shareholders are facing a critical decision as Institutional Shareholder Services (ISS) has just announced its recommendation to reject CEO Elon Musk’s staggering $1.5 trillion pay package. This marks the second consecutive year that ISS has opposed Musk’s compensation, raising significant concerns among investors just ahead of Tesla’s annual shareholders meeting scheduled for November 6.
The proxy adviser’s recommendation poses a potential roadblock for Tesla’s board as they strive to secure support from shareholders. ISS highlighted “unmitigated concerns” regarding the magnitude and structure of Musk’s pay plan, stating that it lacks explicit requirements to ensure he remains focused on Tesla amid his responsibilities with other ventures, including SpaceX, Neuralink, and xAI.
The proposed compensation package is designed to incentivize Musk to keep his attention on Tesla over the next decade by tying his payout to ambitious performance targets, including raising the company’s market value to at least $8.5 trillion. If achieved, Musk could increase his stake in Tesla to over 25%, a move he has threatened to pursue by seeking opportunities outside of the company if his equity holdings remain stagnant.
ISS’s guidance is part of a broader voting advisory released on October 13, as the firm aims to influence large institutional investors who often rely on their recommendations. Notably, both ISS and rival proxy firm Glass Lewis previously urged shareholders to reject Musk’s 2018 pay deal, yet approximately three-quarters of investors supported it at that time. However, a subsequent ruling from a Delaware judge in 2024 invalidated that plan, citing Musk’s undue influence and conflicts of interest within the board.
Musk, who remains Tesla’s largest shareholder despite significantly selling off stock to finance his acquisition of Twitter (now rebranded as X), has been vocal about his ambitions for the company. He was granted an interim award valued at approximately $30 billion in August to partially compensate for the disputed pay package, which could be forfeited if the original plan is reinstated.
As the annual meeting approaches, Tesla’s board chair, Robyn Denholm, reinforced the notion that Musk is irreplaceable at the helm of the company, adding to the emotional weight of this decision for shareholders. In a recent interview, Denholm stated, “No one but Musk can run the company,” further emphasizing the stakes involved in the upcoming vote.
Additionally, ISS has recommended against a proposal for Tesla to invest in Musk’s artificial intelligence venture, xAI. This proposal has drawn scrutiny due to its unusual nature and the circumstances surrounding its presentation to shareholders.
As the clock ticks toward November 6, Tesla is actively promoting a video on X aimed at garnering support for Musk’s pay proposal. With ISS’s recommendations in play, the outcome of this vote could have profound implications for Musk and the future direction of Tesla. Investors are urged to stay informed as developments unfold in this high-stakes situation.
Stay tuned for more updates on this developing story as the shareholders’ meeting approaches and the implications of this critical decision become clearer.
