Consulting firm advises Tesla shareholders to oppose Musk's $1 trillion pay package

Company to vote against Elon Musk's proposed $1 trillion pay package

Consulting firm advises Tesla shareholders to oppose Musk's $1 trillion pay package

Institutional Shareholder Services, a shareholder advisory firm, advised Tesla shareholders to vote against Elon Musk's proposed $1 trillion pay package, citing its "shocking magnitude."

ISS, a shareholder services firm, added that the lack of explicit binding terms in the deal would not ensure the world's richest man's commitment to the company, given his numerous business interests, ranging from SpaceX to xAI. "While it is acknowledged that the board seeks to retain Musk due to his track record and vision for Tesla's future... there are absolute concerns surrounding the size and design of the special bonus," according to a Financial Times report.

This report comes ahead of Tesla's annual meeting on November 6, where shareholders will vote on an unprecedented financial package that could give Musk up to $1 trillion in stock over the next decade. Musk will not receive a salary or bonus under the plan, but will receive stock in installments that vest as Tesla's market value rises and as it achieves a number of milestones, including massive profits and the sale of millions of cars, robot taxis, and AI-powered robots.

"While the performance targets are difficult to achieve, the unprecedented size of the bonus guarantees high salary opportunities for years to come, and billions of dollars can be earned once even a portion of the targets are met," ISS said. Musk runs several other companies and has already amassed a fortune of $448 billion from his stake in Tesla, as well as from his own stakes in SpaceX, xAI, Neuralink, and the Boring Company.

ISS noted that there are no mandatory provisions in the bonus "to ensure Musk's time and focus on Tesla rather than his other projects, undermining the primary rationale for the bonus." The shareholder advisory firm added that this is important to consider now, citing concerns "raised by some investors about CEO Musk being distracted by his other projects."

ISS's recommendation is a blow to the board and its chair, Robyn Denholm, who have been lobbying major shareholders, including Vanguard, BlackRock, and State Street, to support their plan. Denholm told the Financial Times that the bonus is justified because Musk is an exceptional, generational talent. If the new deal is approved, the additional shares Musk could receive would increase his stake in the electric car maker to at least 25%, after taxes and capital reductions.