Proxy Vote is a Test of Shareholder Power, Musk’s Value Versus Per-Share Worth
October 28, 2025—In just over a week, Tesla shareholders are scheduled to meet virtually and at the company’s headquarters in Austin, Texas to decide on corporate governance and a $1 trillion incentive package for CEO Elon Musk.Shareholders are voting up until the end of the day November 5 in time for the annual meeting the following day. Front and center of the decisions this year is a generous pay package for Musk worth $1 trillion over the next 10 years.
Politics Hurts Brand, Shareholder Activists Say
The proposal faces a pushback from a coalition of shareholder and public interest groups under a banner called “Take Back Tesla.” It includes groups like Public Citizen, Stop the Money Pipeline, Americans for Financial Reform, and People’s Action Institute
The response is driven partly in response to Musk’s political activity. He was one of three top donors to President Donald Trump during the 2024 campaign and worked full time for the White House earlier this year. According to Take Back Tesla, that political influence has significantly hurt the company’s brand.
“Musk has embraced right-wing political movements, amplified online conspiracy theories, and attempted to slash government watchdogs,” the website said.
In May, a Pennsylvania public pension fund board voted 4-to-2 to stop investing in Tesla. Mark Pinsley, pension board member and controller of Lehigh County, said he introduced the resolution because “Tesla no longer behaves like a company focused on innovation, customer loyalty, or product integrity. It behaves like a company driven by ego.”
Op-ed by Mark Pinsley: https://www.commondreams.org/opinion/pension-fund-and-tesla
Tesla Board: We ‘Must Motivate Musk’
Tesla board members Robyn Denholm and Kathleen Wilson-Thompson designed what they call a “novel compensation structure” to pay Musk with a series of “tranches” of stock options. The 12 tranches would be tied to market capitalization targets and operational milestones over a ten-year period. In sum, the tranches of stock options could add up to 423.7 million shares.
In a letter to shareholders on Monday, publicly released on X, Denholm acknowledged Musk’s divided attention and said it’s necessary to incentivize him to focus on Tesla.
“Though it’s no question that Elon has other pursuits, he has proven that one of the many things that make him unique is his ability to stretch his capacity beyond normal limits and remain successful at Tesla. However, if we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision, which have been essential to delivering extraordinary shareholder returns.”
Specifically, proposals in the Proxy Statement relating to Musk are:
Proxy statement 2025: https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000110465925090866/tm252289-12_def14a.htm#tSOT2
- Proposal Three, Equity Incentive Plan.
- Proposal Four, the CEO Performance Award.
“We believe that Elon’s singular vision is vital to navigating this critical inflection point,” board members Denholm and Wilson-Thompson said in the proxy statement. “Simply put, retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history.”
The board’s performance plan proposes to tie Musk’s compensation to market capitalization and to operational targets, such as product delivery and earnings.
Tesla’s Value
Tesla’s value in terms of stock has increased by 20 times since 2018, up from $20 a share to $460 today. According to the Third Quarter financial report, Tesla’s revenues increased by 12 percent year-over-year while profit grew by one percent.
https://assets-ir.tesla.com/tesla-contents/IR/TSLA-Q3-2025-Update.pdf
Proxy Adviser Firms Says ‘Vote No’
Adding fuel to the fire this year are recommendations from firms advising institutional clients like asset managers and pension funds. Proxy-vote advisor Glass Lewis the plan’s terms “warrant significant concern.”
Loss of Stock Value
Glass Lewis cited the potential for share dilution. When a company issues more stock, that dilutes the value of existing stock. In essence, it reduces the ownership percentage of existing shares.
Read more about share dilution on Investopedia: https://www.investopedia.com/articles/stocks/11/dangers-of-stock-dilution.asp
What’s key to note is the performance plan is based on market capitalization, not value per share. That means incentives are based on the total of share price plus outstanding shares. The more shares the company creates, the higher the value. In contrast, individual investors and pension funds would hold a set number of shares. The value of those shares would be diluted—decrease—as the company issues more shares.
Likewise, proxy advisor Institutional Shareholder Services (ISS) encouraged a “no” vote on the pay plan, saying it “has an astronomical grant value conditioned upon far-reaching performance targets that, if achieved, would create enormous value for shareholders.” Specifically, the firm raised concerns about “magnitude and design” in the pay plan.
CNBC story: https://www.cnbc.com/2025/10/17/proxy-advisor-iss-opposes-tesla-ceo-elon-musk-1-trillion-pay-plan.html
That could impact large institutional investors like California Public Employees’ Retirement System, California State Teachers’ Retirement System, and the New York City Office of the Comptroller—all of whom opposed a pay plan in 2018, according to AI CIO.
In Tesla’s latest quarterly earnings call, Musk took issue with proxy advising firms, calling them “corporate terrorists.”
“I just don’t feel comfortable building a robot army here and not, and then, uh, you know, being ousted because of some asinine, uh, recommendations from ISS and Glass Lewis who have no friggin clue,” Musk said.
