TLDRs;
- Tesla stock fell 1.42% as investors voiced opposition to Elon Musk’s $1 trillion pay plan ahead of November’s vote.
- A coalition of shareholder groups and state treasurers cited poor oversight and Musk’s distractions from Tesla’s core business.
- Tesla’s board defended the plan as performance-based, tied to ambitious 10-year production and valuation goals.
- Musk’s wealth crossed $500 billion, intensifying debate over his control and compensation amid slowing Tesla growth.
Tesla Inc. ($TSLA) shares slipped 1.42% on Friday after a coalition of major shareholders urged fellow investors to vote against CEO Elon Musk’s proposed $1 trillion compensation plan, citing concerns over corporate governance, performance, and accountability.
The opposition group includes the SOC Investment Group, American Federation of Teachers, and state treasurers from Nevada, New Mexico, and Connecticut.
They argue that the plan, set for a shareholder vote on November 6, 2025, grants excessive rewards while failing to address Musk’s divided attention between Tesla and his other ventures, including SpaceX, xAI, and his leadership role at the U.S. Department of Government Efficiency.
The coalition also called on shareholders to oppose the re-election of board directors Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson, citing “weak oversight and excessive loyalty to Musk.”
Tesla Defends Plan as Performance-Based
Tesla’s board has defended the proposed compensation package as strictly performance-driven, emphasizing that Musk would receive nothing unless ambitious long-term targets are met.
The trillion-dollar proposal would only pay out if Musk achieves a market capitalization of $8.5 trillion over the next decade, alongside major operational milestones, such as producing 12 million EVs annually, achieving $400 billion in yearly revenue, and deploying 1 million Optimus humanoid robots by 2035.
“This package directly aligns Musk’s compensation with shareholder value creation,” Tesla said in a statement. “If the goals are not met, he earns nothing.”
Still, some investors argue the targets are not as challenging as they appear, pointing to Tesla’s weakening financial performance and growing market competition.
Declining Sales, Rising Skepticism
Tesla’s recent numbers have given critics ammunition. In the first half of 2025, the company’s global sales fell 13% compared to the same period last year. The decline was steepest in Europe, where Tesla’s EV market share dropped from 21.6% to 14.5%.
Though Tesla’s third-quarter deliveries rose 7% to nearly 497,099 vehicles, production levels have declined year-over-year, signaling potential strain in operations.
Critics claim Musk’s growing list of commitments, from managing SpaceX launches to overseeing AI developments at xAI and government duties, has left Tesla’s focus diluted.
“Musk has become too distracted to lead effectively,” the shareholder coalition wrote. “The board’s priority seems to be retaining him at any cost.”
Musk’s Wealth and Power Under Scrutiny
The controversy surrounding Musk’s pay package comes just days after Forbes confirmed his net worth surpassed $500 billion, making him the first individual in history to reach that figure. The record valuation was buoyed by a 35% surge in Tesla’s stock price since early September, pushing the company’s market cap within 10% of its all-time high.
Musk defended his compensation plan as a safeguard for his influence within Tesla.
“It’s not about compensation, it’s about maintaining control to ensure Tesla’s long-term safety as we build millions of robots.” He had tweeted.
The proposal has drawn global attention with even Senator Bernie Sanders and Pope Leo XIV criticized it, highlighting concerns that the billionaire’s growing wealth concentration could distort corporate priorities.
As the November shareholder meeting approaches, Tesla faces one of its most pivotal governance tests yet. Whether the proposal passes or fails could shape not only Musk’s grip on the company but also Tesla’s future trajectory in an increasingly competitive electric vehicle and AI landscape.
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