---
title: "The vote on Musk's compensation plan is imminent, and Tesla enters a high-risk moment"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/264585856.md"
description: "Tesla shareholders will vote on November 6 to decide whether to support Musk's compensation plan of up to $1 trillion, facing significant risks. If approved, Musk will receive a substantial stock award, increasing his ownership stake to nearly 29%. The approval of this plan could lead to Tesla's market value growing to $8.5 trillion, but if it fails, Musk may leave, resulting in a sharp decline in stock prices. This move has sparked widespread discussion about corporate governance rules"
datetime: "2025-11-06T12:35:22.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/264585856.md)
  - [en](https://longbridge.com/en/news/264585856.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/264585856.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/264585856.md) | [繁體中文](https://longbridge.com/zh-HK/news/264585856.md)


# The vote on Musk's compensation plan is imminent, and Tesla enters a high-risk moment

According to the Zhitong Finance APP, as Tesla's (TSLA.US) board has placed all its chips on Elon Musk, investors are about to decide whether to support the company's largest gamble in history. Tesla will hold its annual shareholder meeting on November 6, Eastern Time. At that time, shareholders will vote on a tough choice proposed by the board: either support a compensation plan that could grant Musk up to $1 trillion, or face the risk of his potential departure—which could lead to a sharp drop in the company's stock price. Experts say this decision is essentially a referendum on whether traditional corporate governance rules apply to the world's richest person.

**Musk's exorbitant compensation plan vote is imminent! There are significant differences among all parties**

The compensation plan proposed by Tesla in September shows that if Musk achieves a series of performance goals, he will receive stock rewards of up to $1 trillion. These goals include: Tesla's market value reaching $8.5 trillion, selling 12 million cars, delivering 1 million humanoid robots, launching 1 million autonomous taxis (Robotaxi), and increasing adjusted earnings from $16.6 billion in 2024 to $400 billion.

If approved, this would become the largest compensation plan in corporate history. Additionally, if the compensation plan is approved, Musk's ownership stake in Tesla will increase from 13% to nearly 29%, giving him greater control.

If Musk achieves all the performance goals set in the compensation plan within ten years, Tesla's market value will grow to $8.5 trillion, and Musk will own about a quarter of it. This compensation far exceeds that of any other CEO. Moreover, even if Musk misses most of the performance targets, he will still receive a record-breaking compensation of hundreds of billions of dollars.

The Tesla board is trying to ensure Musk's long-term leadership of the company through terms such as stock vesting periods. Krishna Palepu, a professor at Harvard Business School focusing on corporate governance, stated that the plan ties Musk's compensation to significant increases in stock value and requires him to hold the acquired stocks for five years, which aligns with shareholder interests. He added that Musk has a track record of achieving extraordinary stock price growth, and he can only receive the maximum compensation if he does it again, "The numbers are huge because the goals are huge."

Nevertheless, many investors are not concerned about these staggering amounts. Nancy Tengler, CEO and Chief Investment Officer of Laffer Tengler Investments, a Tesla investor, stated, "If Tesla's stock price can increase sixfold—which is a requirement in the compensation plan—then I will also make a lot of money. If he can achieve transformation and vision, why should I care how much he earns?"

Tesla Chair Robyn Denholm also warned shareholders in a letter at the end of October that if Musk's $1 trillion compensation plan is not approved, the CEO may leave Tesla. Denholm pointed out that as Tesla strives to become a leader in global artificial intelligence (AI) and autonomous driving technology, Musk's role is particularly critical. She added that Musk's leadership is "crucial" to Tesla's success and warned that without a plan that can effectively motivate Musk, the company may lose his "time, talent, and vision."During the negotiations, Musk told board members that unless an agreement was reached, he might prioritize his many other ventures—including the rocket company SpaceX, the artificial intelligence startup xAI, and the brain-computer interface company Neuralink.

However, the compensation proposal has drawn criticism from proxy advisory firms such as Institutional Shareholder Services (ISS). ISS urged investors to vote against the proposal, arguing that its scale is too large and lacks effective constraints. The Norwegian Sovereign Wealth Fund, Tesla's ninth-largest shareholder, voted against the compensation plan earlier this week. The fund stated on its official website: "While we recognize that Musk has created tremendous value for the company with his vision, we are concerned about the overall scale of this reward scheme, its dilution effect, and the lack of key person risk mitigation measures."

Other major shareholders and executive compensation experts have warned that the compensation plan poses significant risks to investors. Experts argue that the plan openly violates corporate governance principles, not only because of its enormous scale but also because the board has so explicitly staked Tesla's future on a single leader who has multiple conflicts of interest and may consolidate unchecked power over the company. They believe responsible governance requires the board to remain open and ready to seek the best CEO candidates in a competitive market.

Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, bluntly stated that Tesla's board is being held hostage by a "superstar CEO."

However, there are many supporters as well. Cathie Wood's ARK Invest called Musk "the most efficient person on Earth," crucial to Tesla's future "AI giant" strategy. The Florida State Board of Administration and Baron Capital also share this view, while well-known Tesla bulls like Dan Ives are cheering for Musk. Michael Dell, chairman and CEO of Dell Technologies, wrote on X: "This compensation can only be earned when he achieves extremely ambitious market cap and operational milestones. If he succeeds, shareholders will reap enormous benefits through unprecedented value creation, and he will gain more voting power to continue driving Tesla's long-term vision."

**The Stakes of Bold Commitments**

Musk's influence over Tesla's board and shareholders primarily stems from the fact that the company's current stock market value far exceeds the financial fundamentals of its declining electric vehicle business. In contrast, Tesla's $1.5 trillion market cap is almost entirely reliant on Musk's long-standing commitment that the company will dominate the future of autonomous vehicles and humanoid robots.

Some corporate governance experts say that the threat of a stock price collapse if Musk were to leave Tesla has given him tremendous power, allowing him to make unprecedented compensation demands. The company's board chairman, Robyn Denholm, hinted at this in a letter to shareholders at the end of October: "Without Elon, Tesla could lose significant value, as our company may no longer receive the corresponding valuation for its pursued goals."David Larcker, director of the Corporate Governance Research Initiative at Stanford Graduate School of Business, stated that from a purely economic perspective, it is understandable for Tesla's board to want to retain Musk. He said, "If you think Musk might leave and Tesla's stock price would crash, you certainly wouldn't want that to happen during your tenure."

Gautam Mukunda, a lecturer at Yale School of Management, noted that if Musk meets the performance targets set by the board, his current Tesla shares are already enough to make him the world's first trillionaire, almost without needing the company's "second trillion" as an incentive. He stated that the board should not be intimidated by the departure threats from "the largest shareholder—who stands to lose the most if Tesla's stock price falls."

Gautam Mukunda remarked, "This is someone holding a gun to their own head saying, 'Give me a trillion dollars.' When the CEO makes demands, the board's duty is not just to nod in agreement like a bobblehead."

**Musk Holds Voting Power**

Musk holds a potentially decisive tool in Thursday's vote—his own 15% stake. When Tesla was registered in Delaware, Musk did not exercise his voting rights in previous compensation plan votes. However, the Tesla board stated in the current compensation proposal that under the laws following Tesla's re-registration in Texas, the CEO can do so.

Additionally, about 40% of the shares are held by retail investors who have remained loyal to him; the remaining 45% is held by institutional investors such as Vanguard Group, BlackRock, and State Street Bank. **Such a shareholding ratio should be sufficient to pass at the shareholders' meeting**, which will also decide other matters, such as strategic investments in Musk's artificial intelligence company xAI. It is worth noting that Musk's 2018 compensation plan is still facing legal disputes, with the Delaware Supreme Court reviewing it.

The 2018 compensation plan was rejected by a Delaware judge due to shareholder lawsuits. The Delaware judge stated that Musk's 2018 compensation plan—originally valued at $56 billion and now worth $128 billion—was an "astronomical figure" resulting from negotiations with directors who had conflicts of interest due to their close relationship with Musk and their own excessive compensation.

Tesla has appealed and agreed to grant Musk stock currently valued at $40 billion as a "first step" in fulfilling the 2018 compensation plan. If the Delaware court reinstates the 2018 compensation plan, this reward will be forfeited.

Meanwhile, a provision passed in May makes it more difficult for shareholders to file lawsuits under Texas law. This provision allows companies to require that investors suing directors or executives hold a total of 3% of shares, which Tesla has already done.

For Tesla's board, a greater threat comes from Musk himself—specifically, the threat of his departure from the company. Charles Whitehead, a professor of business law at Cornell University, stated that the Tesla board faces a "classic hostage situation." He noted that a key issue the board has yet to resolve is, "If this CEO leaves, or—hopefully it won't happen—if something happens to him, who can step in as a backup?"

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