Tesla Inc. released a performance report showing a significant decline in profits, but its CEO Elon Musk shifted the focus of the earnings call to defend his massive trillion-dollar compensation package and fiercely criticized shareholder advisory firms that oppose it.
According to a previous article by Wall Street Watch, Tesla's operating profit plummeted 40% in the third quarter, failing to meet Wall Street expectations, reflecting ongoing pressure on its core electric vehicle business. After the earnings report was released, Musk suddenly interrupted the Chief Financial Officer's remarks at the end of the call to defend his substantial compensation package and emphasized the importance of voting control to him.
The dismal performance and the management's unusual statements triggered a negative market reaction. Following the earnings report, Tesla's stock price fell by 5.53%. Although the stock has risen nearly 9% this year, it still lags behind the S&amp;P 500 index's 14% increase.
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This dramatic conclusion sharply contrasts with the bland tone of the first half of the call, which focused on topics such as artificial intelligence, humanoid robots, and autonomous driving. The core of this event, Musk's compensation package, will be put to a shareholder vote at the annual meeting in Austin on November 6.
<h2>In the face of poor performance, advisory firms unanimously oppose the trillion-dollar compensation</h2>
Tesla's latest earnings report reveals that the company is facing severe financial challenges. Despite record-high vehicle deliveries, the operating profit in the third quarter still plummeted by 40%.
According to the report, the company's costs are rising sharply. In the previous quarter alone, the impact of tariffs exceeded $400 million. During the same period, Tesla's operating expenses soared by 50% to $3.4 billion. This series of data reflects that, under the changing U.S. policy environment, the company's electric vehicle business is under tremendous pressure.
Before the shareholder vote, two influential shareholder advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis, have both recommended that investors reject Musk's unprecedented compensation package.
According to media reports, ISS expressed &#34;irremediable concerns&#34; about the scale and design of the award. Glass Lewis believes that the plan could dilute the ownership of other shareholders. The value of this compensation package is directly tied to Tesla's ability to achieve a series of market capitalization and operational milestones.
<h2>&#34;I don't want to be kicked out&#34;: Musk's defense</h2>
In the face of opposition, Musk made a vigorous defense during the earnings call. He interrupted the Chief Financial Officer's summary remarks, stating that he needs &#34;enough voting control to have a strong influence, but not so much that it drives me crazy and makes it impossible to be fired.&#34;
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Elon Musk emphasized that, for him, having enough voting control is more important than monetary compensation:
<blockquote>
“I just feel uncomfortable building a robot army here and then being ousted because of those stupid suggestions from ISS and Glass Lewis; they don't understand anything.”
</blockquote>
After Musk concluded his remarks, Tesla's Chief Financial Officer Vaibhav Taneja continued with his closing statement, praising the special committee of the board for the &#34;excellent work&#34; they did in designing the compensation plan. &#34;Nothing will be paid out until shareholders receive substantial returns,&#34; Taneja stated. He then urged shareholders twice to vote in favor of the plan.
According to the Bloomberg Billionaires Index, the 54-year-old Musk is the world's richest person, with a net worth of approximately $455 billion

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At the end of the earnings call, Musk interrupted the CFO's speech, fiercely defending his exorbitant compensation plan worth trillions of dollars. He stated that he needs "sufficient voting control" to exert influence and criticized the proxy advisory firms that suggested shareholders reject this plan. The dismal performance and unusual statements triggered a negative market reaction, with Tesla's stock price falling by 5.53%

- Tesla reported a significant 40% drop in operating profit for the third quarter, failing to meet Wall Street expectations, which reflects ongoing pressure in its core electric vehicle business.  
- CEO Elon Musk defended his controversial $1 trillion compensation plan during the earnings call, emphasizing the importance of voting control, while facing opposition from influential shareholder advisory firms recommending a vote against the plan.  
- Following the earnings report, Tesla's stock fell 5.53%, highlighting the market's negative reaction to both the disappointing results and Musk's unusual statements amid rising operational costs.

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Profit plummets 40%, hard to hide the embarrassment: Musk showcases extravagant compensation plan at the earnings call