Institutional Shareholder Services (ISS), a leading proxy advisory firm, has recommended that Tesla shareholders vote against Elon Musk’s proposed $1 trillion pay package, citing concerns over its “striking magnitude” and the absence of binding provisions to ensure his focus remains on the electric-vehicle giant. The Financial Times highlighted that the recommendation adds a new layer of scrutiny to a deal that could be unprecedented in corporate history.
ISS noted that while the 2025 award is linked to far-reaching performance targets, including a huge increase in earnings, vehicle sales, and deployment of AI-powered robots, the sheer size of the grant raises questions about whether it would truly retain Musk’s attention amid his multiple ventures, including SpaceX, xAI, Neuralink, and The Boring Company. “There are no prescriptive elements within the award to ensure his focus and time remain on Tesla,” the advisory said.
The package, which would vest over a decade, would grant Musk up to 423 million shares if he achieves ambitious goals, including raising Tesla’s market capitalisation from $1.38 trillion to $8.5 trillion — nearly twice that of Nvidia, currently the world’s most valuable company. Even partial achievement of these goals could unlock billions in stock, ISS warned.
Tesla’s board, led by chair Robyn Denholm, has lobbied major shareholders such as Vanguard, BlackRock, and State Street to support the proposal. Denholm told the Financial Times that the package is justified given Musk’s “generational talent” and extraordinary workload. However, ISS called for caution, emphasizing investor concerns that Musk could be distracted by his other business interests.
The advisory also recommended that Tesla shareholders vote against the re-election of corporate governance committee chair Ira Ehrenpreis, who “unilaterally” adopted a bylaw restricting shareholder litigation rights. By contrast, ISS urged backing two other directors, Kathleen Wilson-Thompson and Joe Gebbia. Additionally, the firm advised rejecting a nonbinding retail shareholder proposal for Tesla to invest in Musk’s xAI venture, citing procedural irregularities and unusual circumstances surrounding the proposal’s inclusion on the ballot.
Musk, who has already received an interim award of 96 million shares worth roughly $30 billion pending a Delaware Supreme Court appeal, has indicated that he may consider leaving Tesla if he does not gain greater control, arguing that it is necessary to protect the company from activist investors or potential hostile takeovers.
The upcoming Tesla annual meeting on November 6 will be closely watched as shareholders decide the fate of the record-breaking pay deal, which could substantially increase Musk’s stake in the company to at least 25 percent after taxes and dilution if fully approved.
