A group of Tesla investors is urging shareholders not to confirm Elon Musk's $1 trillion pay package

Core Viewpoint - A coalition of unions, state treasurers, and institutional investors is urging Tesla shareholders to reject CEO Elon Musk's proposed $1 trillion pay package due to concerns over the board's independence and the vagueness of performance goals [1][2]. Group 1: Investor Concerns - The investor group includes notable entities such as SOC Investment Group and the American Federation of Teachers, who have previously criticized Tesla's board for its lack of independence from Musk [1][2]. - The letter highlights that the performance goals tied to Musk's compensation are not as rigorous as they seem, questioning the clarity and demands of these targets [2]. Group 2: Compensation Package Details - To access the full $1 trillion payout, Musk must increase Tesla's market capitalization to $8.5 trillion within the next decade and achieve several ambitious product milestones, including annual earnings of $400 billion and delivering around 12 million EVs by 2035 [3]. - The letter points out that the average annual delivery target of 1.2 million EVs is significantly lower than Tesla's sales in 2024, raising doubts about the feasibility of these goals [3]. Group 3: Board and Performance Issues - The shareholder group criticizes Tesla's board for not ensuring Musk's commitment to focus on Tesla, given his involvement in multiple companies, and warns that the pay package could result in share dilution for existing shareholders [8]. - Tesla's performance has been volatile, with sales and revenue declining in the first half of the year due to increased competition and backlash against Musk's political activities [8]. Group 4: Tesla's Response - In response to the criticisms, Tesla's board argues that the compensation package is designed to create trillions of dollars in value for shareholders and to promote global prosperity [9]. - The company emphasizes that Musk will not receive any compensation if he fails to deliver results, reinforcing the performance-based nature of the pay package [10].