Tesla’s proposed $1 trillion pay package for CEO Elon Musk got here under fresh scrutiny on Friday, with proxy adviser ISS urging shareholders to reject what is likely to be the largest-ever compensation plan awarded to an organization chief.
That is the second consecutive 12 months that Institutional Shareholder Services has urged investors to reject a compensation plan for Musk. Proxy advisers often sway major institutional investors, including the passive funds that hold large stakes in Tesla.
The ISS advice adds pressure on Tesla’s board ahead of a closely watched Nov. 6 shareholder meeting and renews scrutiny of Musk’s compensation after a Delaware court earlier voided his $56 billion pay package.
Musk’s record Tesla pay plan could still hand him tens of billions of dollars even when he falls in need of most of its ambitious targets, nevertheless, due to a structure that rewards partial achievement and soaring share prices.
Last month, Tesla’s board proposed a $1 trillion compensation plan for Musk in what it described as the most important corporate pay package in history, setting ambitious performance targets and aiming to handle his push for greater control over the corporate.
ISS said that while the board’s goal was to retain Musk due to his “track record and vision,” the 2025 pay package “locks in extraordinarily high pay opportunities over the subsequent ten years” and “reduces the board’s ability to meaningfully adjust future pay levels.”
Tesla’s shares rose after the compensation plan was unveiled last month, as investors consider the pay package would incentivize Musk to concentrate on the corporate’s strategy.
“Many individuals come to Tesla to specifically work with Elon, so we recognize that retaining and incentivizing him will, in the long term, help us retain and recruit higher talent,” Director Kathleen Wilson-Thompson said in a video posted to Tesla’s X handle on Friday.
Unlike the 2018 pay deal, Musk can be allowed to vote his shares this time, giving him about 13.5% of Tesla’s voting power, in line with a securities filing last month. That stake alone might be enough to secure approval.
The proxy adviser cited the “astronomical” size of the proposed grant, design features that would deliver very high payouts for partial goal achievement and potential dilution for existing investors.
ISS “once more completely misses fundamental points of investing and governance,” Tesla said in a separate post on X, while reiterating the decision to vote for all proposals.
“It’s easy for ISS to inform others learn how to vote after they don’t have anything on the road,” Tesla said.
ISS valued the stock-based award at $104 billion, higher than Tesla’s own estimate of $87.8 billion.
The grant would vest provided that Tesla reaches market capitalization milestones as much as $8.5 trillion and operational targets including delivery of 20 million vehicles, a million robotaxis and $400 billion in adjusted core earnings.
The proxy adviser’s guidance on Musk’s pay was a part of a wider set of voting recommendations issued on Friday.
