Tesla's $1 Trillion Pay Proposal For Musk Faces Investor Pushback—What We Know

Core Viewpoint - A group of Tesla investors and state officials are urging shareholders to vote against CEO Elon Musk's proposed compensation package, which could be valued at approximately $1 trillion if ambitious goals are met over the next decade [1][2]. Group 1: Investor Concerns - The letter sent to Tesla shareholders criticizes the board for potentially harming the company's reputation in their pursuit of retaining Musk [2]. - Signatories of the letter include notable investors and state officials, who allege that the board is composed of directors with close ties to Musk, raising concerns about impartiality in decision-making [3]. - The letter highlights Tesla's "negative and highly volatile" operational and financial performance, including a decline in sales in key European markets [3]. Group 2: Board Oversight Issues - The letter questions the board's ability to provide objective oversight, citing personal and professional ties to Musk that may hinder their ability to challenge him [4]. - Investors argue that the board has allowed Musk to be overcommitted, taking on leadership roles in other companies, which they believe negatively impacts Tesla's performance [4]. Group 3: Compensation Package Details - The proposed compensation package for Musk includes an additional 12% stake in Tesla, contingent on meeting specific goals, with the market cap target set to increase from approximately $1.37 trillion to $8.5 trillion over ten years [7]. - Tesla's response to the criticism states that the proposed package aligns Musk's compensation with shareholder value creation, emphasizing that he will receive nothing if he does not deliver results [6][7]. Group 4: State Officials' Stance - New York State Comptroller Thomas P. DiNapoli announced that the New York State Common Retirement Fund will vote against the proposal, citing concerns over Musk's focus on the company amidst his other commitments [5].