Tesla shareholders face a historic vote on Elon Musk's $1 trillion pay package
Tesla shareholders will decide one of the most consequential votes in corporate history on November 6, 2025. They'll vote on a proposed $1 trillion compensation package for CEO Elon Musk—a figure that dwarfs every executive pay plan ever conceived. The decision reaches far beyond Tesla's boardroom, potentially reshaping standards for corporate governance, executive compensation, and the relationship between visionary founders and public company shareholders.
The background: Delaware courts reject a pay package
The current controversy started with Musk's 2018 compensation package, originally valued at $55.8 billion. In January 2024, Delaware Court of Chancery Chancellor Kathaleen McCormick struck down this package in the landmark case Tornetta v. Musk, ruling that Tesla's board breached their duties to shareholders.
The court made a critical finding: despite owning only 21.9% of Tesla at the time, Musk functioned as a "controlling shareholder." Chancellor McCormick determined that the approval process was "deeply flawed" because Tesla's board lacked true independence from their CEO, and shareholders didn't receive full information when they approved the package in 2018.
Tesla tried to address the ruling through a ratification vote in June 2024, where 72-77% of shareholders (excluding Musk's shares) voted to reinstate the package. However, in December 2024, Chancellor McCormick again rejected the pay package, ruling that post-trial ratification provided "no procedural ground for flipping the outcome" of her original decision.
Tesla has appealed to the Delaware Supreme Court, with oral arguments held in October 2025. Meanwhile, the company reincorporated from Delaware to Texas in June 2024, trying to escape Delaware's jurisdiction—a move that sparked a broader "DExit" phenomenon among companies concerned about Delaware's corporate governance standards.
The new package: an unprecedented $1 trillion proposal
With the 2018 package still tied up in litigation, Tesla's board proposed a new compensation structure in September 2025. This package could potentially reach $1 trillion over 10 years, making it the largest executive compensation plan ever proposed.
The structure includes 12 tranches of stock options, with Musk receiving about 1% of Tesla's shares for each tranche unlocked. However, earning the full compensation requires achieving ambitious performance targets:
- Growing Tesla's market cap from $1.1-1.4 trillion to $8.5 trillion
- Increasing annual adjusted EBITDA from $15 billion to $400 billion
- Delivering 20 million vehicles cumulatively
- Achieving 10 million Full Self-Driving subscriptions
- Deploying 1 million Tesla Bot humanoid robots
- Operating 1 million Robotaxis
If fully realized, this would give Musk an additional 12% ownership stake, bringing his total voting power to 25-29%—a threshold Musk has publicly stated he wants to maintain "influential" control while not becoming "too powerful."
The independence problem: a board too close to Musk
Central to both Delaware's original ruling and current criticisms is the question of board independence. Critics point to numerous problematic relationships between Musk and Tesla's directors:
Kimbal Musk, Elon's brother, has served on Tesla's board for over 20 years and doesn't serve on any board committees. James Murdoch vacations with Musk's family. Board members have collectively earned over $650 million from selling Tesla shares and hold over $1 billion in stock options. Some directors have joint investments with Musk worth tens of millions of dollars and have reportedly participated in recreational drug use with him.
Chancellor McCormick found that board members had such close ties to Musk that they "spent the night at each other's homes," "vacationed together with their families," and "spent Christmas together"—making them the "opposite" of the "staunchly independent" directors needed to negotiate with a powerful CEO. The court described the relationship between Tesla and Musk as "intertwined, almost in a Mary Shelley ('You are my creator...') sort of way."
Major institutional opposition mounts
The compensation package faces pushback from major institutional investors and proxy advisory firms:
Institutional Shareholder Services (ISS) recommended voting against the package for the second year, citing its "astronomical" size and "unmitigated concerns" with its magnitude and design. ISS noted that Musk oversees five companies with "no explicit requirements" to ensure he focuses on Tesla.
Glass Lewis, the second major proxy advisory firm, joined ISS in recommending rejection. The firm expressed concern about potential shareholder dilution of 11.3% and valued the package at $141.6 billion—significantly higher than Tesla's own $87.8 billion estimate.
CalPERS, the largest U.S. public pension fund holding about 5 million Tesla shares, opposed the package, stating it is "larger than pay packages for CEOs in comparable companies by many orders of magnitude" and would "further concentrate power in a single shareholder."
Norway's sovereign wealth fund, the world's largest and owner of 1.1% of Tesla, announced it would vote against the package, citing concerns about "total size of the award, dilution, and lack of mitigation of key person risk."
A coalition of institutional shareholders, including SOC Investment Group and state treasurers from Nevada, New Mexico, and Connecticut, urged rejection, criticizing the board's "relentless pursuit" of retaining Musk amid "declining operational and financial performance" with "lack of effective oversight."
Supporters rally behind Musk
Not everyone opposes the package. Baron Capital, whose firm has made about 20 times its initial investment in Tesla since 2014, supports the plan. Ron Baron stated simply: "Tesla is better with Elon. Tesla is Elon."
The State Board of Administration of Florida, holding over $1 billion in Tesla shares, backs the plan, describing it as a "bold, performance-driven incentive structure." ARK Invest CEO Cathie Wood expressed confidence that the package would pass and could lead to "super-exponential growth," calling Musk "the most productive human being on earth."
The xAI conflict and additional concerns
Adding complexity to the situation is the controversy around Musk's artificial intelligence startup, xAI. Shareholders have filed lawsuits claiming Musk and Tesla's board allowed him to "plunder resources from Tesla and divert them to xAI" with no benefit to Tesla shareholders.
A shareholder proposal on the November 6 ballot would authorise Tesla's board to invest in xAI "in an amount and form deemed appropriate by the Board." This is the only shareholder proposal where Tesla's board hasn't taken a position—widely interpreted as tacit support. However, both ISS and external analysts have recommended voting against this proposal due to conflicts of interest.
The threat of departure
Tesla Board Chair Robyn Denholm warned in an October 2025 letter that the company risks losing Musk's "time, talent and vision" if shareholders reject the pay package. She stated: "Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become."
Musk himself has previously threatened to build AI and robotics products "outside of Tesla" if he doesn't achieve about 25% voting control. He currently holds about 13% of Tesla—down from higher levels after selling stock to finance his $44 billion Twitter/X acquisition. Musk has made clear his desire for greater voting power.
Critics argue this constitutes "blackmail" of shareholders, noting the irony that Musk sold about $30 billion in Tesla stock to buy Twitter, then demands more shares to stay focused on Tesla.
What happens next?
With the November 6 vote approaching, the outcome will determine far more than whether Musk becomes the world's first trillionaire. It will set precedents for executive compensation, board independence, and corporate governance for years to come.
Despite institutional opposition, analysts expect the package to pass, given support from retail investors and Musk's ability to vote his own 13.5% stake this time—unlike in 2018. The vote represents a fundamental question: Is any CEO, regardless of their track record or vision, worth a compensation package that exceeds the GDP of most nations?
For Tesla shareholders, the decision comes down to whether they believe Musk's continued leadership justifies unprecedented dilution and concentration of control, or whether the company has grown beyond needing such extraordinary incentives for its founder.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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Table of Contents
Tesla shareholders will decide one of the most consequential votes in corporate history on November 6, 2025. They'll vote on a proposed $1 trillion compensation package for CEO Elon Musk—a figure that dwarfs every executive pay plan ever conceived. The decision reaches far beyond Tesla's boardroom, potentially reshaping standards for corporate governance, executive compensation, and the relationship between visionary founders and public company shareholders.
The background: Delaware courts reject a pay package
The current controversy started with Musk's 2018 compensation package, originally valued at $55.8 billion. In January 2024, Delaware Court of Chancery Chancellor Kathaleen McCormick struck down this package in the landmark case Tornetta v. Musk, ruling that Tesla's board breached their duties to shareholders.
The court made a critical finding: despite owning only 21.9% of Tesla at the time, Musk functioned as a "controlling shareholder." Chancellor McCormick determined that the approval process was "deeply flawed" because Tesla's board lacked true independence from their CEO, and shareholders didn't receive full information when they approved the package in 2018.
Tesla tried to address the ruling through a ratification vote in June 2024, where 72-77% of shareholders (excluding Musk's shares) voted to reinstate the package. However, in December 2024, Chancellor McCormick again rejected the pay package, ruling that post-trial ratification provided "no procedural ground for flipping the outcome" of her original decision.
Tesla has appealed to the Delaware Supreme Court, with oral arguments held in October 2025. Meanwhile, the company reincorporated from Delaware to Texas in June 2024, trying to escape Delaware's jurisdiction—a move that sparked a broader "DExit" phenomenon among companies concerned about Delaware's corporate governance standards.
The new package: an unprecedented $1 trillion proposal
With the 2018 package still tied up in litigation, Tesla's board proposed a new compensation structure in September 2025. This package could potentially reach $1 trillion over 10 years, making it the largest executive compensation plan ever proposed.
The structure includes 12 tranches of stock options, with Musk receiving about 1% of Tesla's shares for each tranche unlocked. However, earning the full compensation requires achieving ambitious performance targets:
- Growing Tesla's market cap from $1.1-1.4 trillion to $8.5 trillion
- Increasing annual adjusted EBITDA from $15 billion to $400 billion
- Delivering 20 million vehicles cumulatively
- Achieving 10 million Full Self-Driving subscriptions
- Deploying 1 million Tesla Bot humanoid robots
- Operating 1 million Robotaxis
If fully realized, this would give Musk an additional 12% ownership stake, bringing his total voting power to 25-29%—a threshold Musk has publicly stated he wants to maintain "influential" control while not becoming "too powerful."
The independence problem: a board too close to Musk
Central to both Delaware's original ruling and current criticisms is the question of board independence. Critics point to numerous problematic relationships between Musk and Tesla's directors:
Kimbal Musk, Elon's brother, has served on Tesla's board for over 20 years and doesn't serve on any board committees. James Murdoch vacations with Musk's family. Board members have collectively earned over $650 million from selling Tesla shares and hold over $1 billion in stock options. Some directors have joint investments with Musk worth tens of millions of dollars and have reportedly participated in recreational drug use with him.
Chancellor McCormick found that board members had such close ties to Musk that they "spent the night at each other's homes," "vacationed together with their families," and "spent Christmas together"—making them the "opposite" of the "staunchly independent" directors needed to negotiate with a powerful CEO. The court described the relationship between Tesla and Musk as "intertwined, almost in a Mary Shelley ('You are my creator...') sort of way."
Major institutional opposition mounts
The compensation package faces pushback from major institutional investors and proxy advisory firms:
Institutional Shareholder Services (ISS) recommended voting against the package for the second year, citing its "astronomical" size and "unmitigated concerns" with its magnitude and design. ISS noted that Musk oversees five companies with "no explicit requirements" to ensure he focuses on Tesla.
Glass Lewis, the second major proxy advisory firm, joined ISS in recommending rejection. The firm expressed concern about potential shareholder dilution of 11.3% and valued the package at $141.6 billion—significantly higher than Tesla's own $87.8 billion estimate.
CalPERS, the largest U.S. public pension fund holding about 5 million Tesla shares, opposed the package, stating it is "larger than pay packages for CEOs in comparable companies by many orders of magnitude" and would "further concentrate power in a single shareholder."
Norway's sovereign wealth fund, the world's largest and owner of 1.1% of Tesla, announced it would vote against the package, citing concerns about "total size of the award, dilution, and lack of mitigation of key person risk."
A coalition of institutional shareholders, including SOC Investment Group and state treasurers from Nevada, New Mexico, and Connecticut, urged rejection, criticizing the board's "relentless pursuit" of retaining Musk amid "declining operational and financial performance" with "lack of effective oversight."
Supporters rally behind Musk
Not everyone opposes the package. Baron Capital, whose firm has made about 20 times its initial investment in Tesla since 2014, supports the plan. Ron Baron stated simply: "Tesla is better with Elon. Tesla is Elon."
The State Board of Administration of Florida, holding over $1 billion in Tesla shares, backs the plan, describing it as a "bold, performance-driven incentive structure." ARK Invest CEO Cathie Wood expressed confidence that the package would pass and could lead to "super-exponential growth," calling Musk "the most productive human being on earth."
The xAI conflict and additional concerns
Adding complexity to the situation is the controversy around Musk's artificial intelligence startup, xAI. Shareholders have filed lawsuits claiming Musk and Tesla's board allowed him to "plunder resources from Tesla and divert them to xAI" with no benefit to Tesla shareholders.
A shareholder proposal on the November 6 ballot would authorise Tesla's board to invest in xAI "in an amount and form deemed appropriate by the Board." This is the only shareholder proposal where Tesla's board hasn't taken a position—widely interpreted as tacit support. However, both ISS and external analysts have recommended voting against this proposal due to conflicts of interest.
The threat of departure
Tesla Board Chair Robyn Denholm warned in an October 2025 letter that the company risks losing Musk's "time, talent and vision" if shareholders reject the pay package. She stated: "Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become."
Musk himself has previously threatened to build AI and robotics products "outside of Tesla" if he doesn't achieve about 25% voting control. He currently holds about 13% of Tesla—down from higher levels after selling stock to finance his $44 billion Twitter/X acquisition. Musk has made clear his desire for greater voting power.
Critics argue this constitutes "blackmail" of shareholders, noting the irony that Musk sold about $30 billion in Tesla stock to buy Twitter, then demands more shares to stay focused on Tesla.
What happens next?
With the November 6 vote approaching, the outcome will determine far more than whether Musk becomes the world's first trillionaire. It will set precedents for executive compensation, board independence, and corporate governance for years to come.
Despite institutional opposition, analysts expect the package to pass, given support from retail investors and Musk's ability to vote his own 13.5% stake this time—unlike in 2018. The vote represents a fundamental question: Is any CEO, regardless of their track record or vision, worth a compensation package that exceeds the GDP of most nations?
For Tesla shareholders, the decision comes down to whether they believe Musk's continued leadership justifies unprecedented dilution and concentration of control, or whether the company has grown beyond needing such extraordinary incentives for its founder.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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