A collection of government officials and an influential investment group have penned a letter to Tesla shareholders urging them to reject a proposed $1 trillion pay package for Elon Musk, the company’s CEO. The group also urged shareholders to vote against the reelection of three Tesla board members.
“Since the last annual meeting, we have unfortunately witnessed both the erratic performance of Tesla, Inc. … and the Board’s failure to provide meaningful real-time oversight of management,” the letter said. “The Board’s relentless pursuit of retaining its CEO seems to have harmed the Company’s reputation, led to extraordinarily high levels of executive compensation, and delayed progress on meeting key goals like full self-driving.”
A shareholder vote is scheduled to take place Nov. 6, according to the letter.
What’s happening?
2025 has been quite the year for both Musk and Tesla. While Tesla saw its vehicle sales, U.S. EV market share, and stock price plummet during the first half of the year, as Musk spent much of his time in Washington, D.C., running the Department of Government Efficiency, Tesla sales and shares rebounded significantly in the third quarter, which ended Sept. 30.
Thanks in large part to Tesla’s stock price surging upward by over 30% during the month of September, Musk briefly became the first person in history to surpass $500 billion in net worth.
In an effort to keep the focus of its mercurial CEO set on the company and its goals, the Tesla board has offered Musk an unprecedented $1 trillion compensation package, which has been met with heavy criticism from everyone from Bernie Sanders, a U.S. Senator from Vermont, to Pope Leo.
The letter writers, which included the influential SOC Investment Group, several state treasurers, as well as the comptroller of New York, strongly urged Tesla shareholders to reject Musk’s pay package and fire three board members. Tesla’s board of directors has long faced criticism for its alleged lack of impartiality and an inappropriate fealty to Musk.
In a response posted to the Musk-owned social-media platform X, Tesla defended the pay package, saying it aligned the CEO’s incentives with those of shareholders.
“If Elon Musk doesn’t deliver results, he receives nothing,” Tesla wrote, according to Reuters.
Why is it important?
Tesla’s record-setting compensation offer to Musk is important for several reasons. As the world’s richest person, Musk has shown a willingness to use his vast personal wealth to influence politics in the U.S. and abroad, often throwing his clout and financial largesse behind far-right, anti-immigrant causes.
Further, many experts have argued that the $1 trillion proposal sets a bad precedent for corporate governance.
“The proposed scheme is ludicrous not only in terms of the highly aspirational 12 milestones that would unlock the benefits, but also in terms of good governance practice,” Jeffrey A. Sonnenfeld and Stephen Henriques of Yale University wrote in Yale Insights.
“Renowned founders such as Bernie Marcus of Home Depot, Bill Gates of Microsoft, Michael Dell of Dell Technologies, Steve Schwarzman of Blackstone, Sam Walton of Walmart, and Larry Fink of BlackRock never fabricated shakedown strategies like this to regain more control of their companies after they went public,” added Sonnenfeld and Henriques, who are both experts on executive leadership and corporate governance.
Further, Musk‘s controversial forays into government and politics have shown the dangers that allowing one man to accumulate so much wealth and power can pose to democratic institutions.
What’s being done about it?
Ultimately, the decision as to whether or not to approve Musk’s $1 trillion compensation package and retain the board’s current members will come down to a vote of Tesla shareholders. According to a Reuters report from early September, shareholders — many of whom are devout fans of Musk — appeared likely to toe the company line on both fronts.
However, for those who are in the market for an electric vehicle but may be averse to Musk or his politics, many more EV alternatives are available today than existed when Tesla released its first car in 2008, giving them plenty of non-Tesla options to choose from.
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