Tesla’s record-breaking $1 trillion compensation plan for CEO Elon Musk has run into its first serious challenge. Influential proxy advisory firm Institutional Shareholder Services, or ISS, has officially recommended that investors vote against the proposal, calling it “excessive” and potentially damaging to shareholder interests. According to Teslarati, this marks the first significant opposition Musk has faced since Tesla announced the plan earlier this month.
ISS raised several concerns about the deal, describing it as one of the largest single executive compensation packages in history. The firm argued that such an enormous stock-based award could give Musk disproportionate influence and weaken Tesla’s governance structure. It also pointed out that certain parts of the plan could still vest even if some of the company’s performance goals are not fully met, creating what it called “misaligned incentives.”
Tesla’s board insists the package is necessary to retain Musk’s focus as the company expands beyond electric vehicles into robotics, energy, and artificial intelligence. The plan ties Musk’s payout to extremely ambitious targets, including increasing Tesla’s market value to $8.5 trillion and achieving major milestones in autonomy and humanoid robotics. The board maintains that Musk’s leadership is critical for these next-generation projects and that the compensation is entirely performance-driven.
Still, ISS isn’t convinced. The firm warned that the plan could significantly dilute shareholder value if Tesla’s stock continues to rise and the full award vests. Some analysts also argue that Musk’s already substantial ownership stake in Tesla provides sufficient motivation to continue driving growth. Others have noted that this move comes at a delicate time for the company, with slowing EV demand and intensifying competition from Chinese automakers.
Tesla has faced similar scrutiny before. Earlier this year, a Delaware court struck down Musk’s previous $56 billion pay plan, ruling that the board’s approval process lacked independence and transparency. The new $1 trillion deal, though larger in scope, is designed to address those issues — but the ISS recommendation could sway large institutional investors to reject it.
With Tesla’s shareholder vote scheduled for November 6, the battle over Musk’s record-breaking compensation is far from over. Whether investors side with Musk or heed ISS’s warning could determine not only the future of Tesla’s leadership but also set a precedent for how far CEO pay can go in corporate America.