Proxy advisor ISS opposes Tesla CEO Elon Musk $1 trillion pay plan

Top proxy advisor Institutional Shareholder Services recommends that Tesla investors vote against a pay plan that would give CEO Elon Musk nearly $1 trillion more in stock.

The “mega performance equity award” given to Musk, designed to retain the CEO for the long term, “has an astronomical grant value tied to broad performance goals that, if achieved, will create tremendous value for shareholders,” ISS wrote on Friday. he wrote.

Tesla’s 2025 annual shareholder meeting and proxy vote It is scheduled for November 5th. The company is scheduled to report third-quarter results on Wednesday.

ISS said some shareholders may support the payout plan, but “there are serious concerns about the size and design of the special award.”

Musk’s plan, if approved, would be the largest ever given to a public company CEO. Musk could be granted up to an additional 12 percent stake in Tesla if the company reaches a market value of $8.5 trillion and achieves other goals.

Tesla went against the ISS’s recommendations.

One Publish on XThe automaker accused ISS of missing “fundamentals of investment and governance” and complained that advisors had previously “advised against compensation that shareholders have already voted on twice (and that Elon has already won) as well as the 2025 CEO Performance Award (in which Elon gets nothing unless shareholders win big).”

The company urged shareholders to vote in accordance with the board’s recommendations on all proposals related to the 2025 proxy statement.

ISS had previously advised investors to reject the “approval” of Musk’s 2018 CEO pay package, which was worth an estimated $56 billion at the time.

The Delaware Court of Chancery ruled early last year that the 2018 pay plan was improperly issued by Tesla’s board and should be rescinded. The decision stated that Tesla hid important details from the shareholders that they were entitled to before the vote and that Musk controlled the board of directors.

Musk appealed the court’s decision to the Delaware County Supreme Court, with opening arguments on the appeal heard by a panel of judges this week.

ISS representatives declined to comment beyond the report.

ISS, along with Glass Lewis and its smaller peers, can influence shareholders’ decisions to vote in annual elections. Musk blames ISS and Glass Lewis in 2023 They can effectively control the stock market due to their influence on some issues with passive or index funds. He also baselessly compared the ISS to a terrorist organization.

Musk will be able to use his own shares to vote on his future salary. He holds at least 13.5% of Tesla’s voting power, according to the latest available disclosures of his shares. Those holdings alone could be enough to win approval for the nearly $1 trillion pay package.

Musk increased his ownership of Tesla shares in September and purchased another $1 billion worth of shares.

Among other ISP recommendations, the firm also suggested that shareholders should vote against granting Tesla’s board the authority to invest in xAI, the artificial intelligence company that Musk founded in March 2023 but publicly disclosed in July of that year. Tesla sold tens of millions of dollars worth of Megapack battery energy storage systems to xAI.

ISS also recommended against voting to reinstate Tesla board member Ira Ehrenpreis, a longtime close friend of Musk.

In May, Tesla amended its corporate charter to limit shareholders’ ability to sue for breach of fiduciary duties; Thus, only a shareholder who owns at least 3% of the company’s shares can bring what is called a “derivative” lawsuit. Ehrenpreis was chairing Tesla’s management committee at the time the change was made without a shareholder vote.

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