Tesla investors are meeting this afternoon to vote on multiple key proposals, most notably the controversial $1 trillion compensation package sought by CEO Elon Musk. The outcome will determine not only Musk’s future pay but also his level of control over the company’s direction in AI and robotics.
Tesla’s annual shareholder meeting kicks off Thursday afternoon at 4 p.m. ET at the company’s headquarters in Austin. Attendance is limited to a select number of invited shareholders.
While investors are voting on several proposals, the primary focus is Musk’s compensation. This plan is contingent upon achieving extremely ambitious milestones by 2035, including boosting Tesla’s market capitalization to $8.5 trillion, selling 12 million vehicles annually, and deploying one million robotaxis and one million humanoid robots.
The proposal has been highly divisive. Proxy advisory firms ISS and Glass Lewis urged shareholders to reject the plan, prompting Musk to label them “corporate terrorists” during a recent earnings call. Furthermore, board chair Robyn Denholm warned shareholders in an October letter that Musk might leave the company if the compensation package is not approved.
Although Tesla’s shares have recovered from an earlier downturn this year, the company faces sales uncertainty due to the end of the US EV tax credit and rising competition.
Key shareholders are split on the proposal. Bullish investors, including Cathy Wood of ARK Invest and Wedbush Securities, support the package. Institutional investors like the state board of administration of Florida, Baron Capitol, and Schwab Asset Management have also indicated they will vote yes.
However, Norges Bank, manager of Norway’s $2 trillion sovereign wealth fund and Tesla’s sixth-largest institutional investor, announced its opposition on Tuesday, joining several trade unions and state pension funds. The two largest institutional investors, BlackRock and Vanguard Group, have not disclosed their votes.
Musk Seeks Increased Voting Power
Musk has linked the approval of the pay package directly to his commitment to developing AI and robotics at Tesla, arguing that increasing his voting power is essential. He has frequently expressed concern about his current level of control, stating last month that he requires more equity to feel comfortable “building a robot army.”
He said:
I just don’t feel comfortable building a robot army here and then being ousted because of some asinine recommendations from ISS and Glass Lewis.
Musk aims for an equity stake in the “mid-20s” to ensure “a strong influence” while remaining subject to termination if he were to go “insane.” If all performance milestones are met, the new pay package would unlock additional shares, raising his total stake to roughly 25%.
Musk Allowed to Vote on His Own Pay
Unlike the vote on the 2018 pay package last year, Musk and his brother, Kimbal, are permitted to vote on this new compensation plan.
When Tesla sought ratification for the 2018 package under Delaware law (its former state of incorporation), the result required approval by “a majority of votes cast by disinterested stockholders.” Since Tesla has reincorporated in Texas, it is not restricting the current vote to “disinterested stockholders.” Musk’s personal equity stake, currently about 15%, significantly increases the likelihood of the package being approved.
14 Proposals on the Ballot
Shareholders are voting on 14 proposals in total. Key items include the re-election of three board members—Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson—and whether Tesla should explore investing in Musk’s AI startup, xAI.
Although Musk previously indicated openness to the xAI idea, Tesla has remained neutral on the proposal, recommending “none.” This position is likely intended to protect the company from future legal challenges regarding one Musk-led entity investing in another.
Investors will also vote on establishing share reserves for attracting top talent and allocating 208 million shares to “address the uncertainty” surrounding the legally contested 2018 pay package, which was previously tossed out by a judge.
“A Pivotal Juncture”
Leading up to the meeting, Tesla executives engaged in a major promotional campaign. The company ran paid ads on X.com, released videos detailing voting recommendations, and board chair Robyn Denholm appeared in the media to advocate for Musk’s compensation.
The company’s voting website emphasizes the importance of the decision:
“The Future of Tesla Is in Your Hands,” the company’s “votetesla.com” website reads. “We are at a pivotal juncture in Tesla’s history, and the proposals the Special Committee has carefully designed and the Board has put forward will help determine Tesla’s future. If you believe, like us, that Elon is the CEO that can make our ambitious vision a reality, vote NOW.”
