Tesla(US:TSLA) Business Insider·2025-10-21 14:07Core Viewpoint - Tesla's proposed $1 trillion compensation package for CEO Elon Musk is facing significant opposition from influential proxy-advisory firms, which warn it could lead to unprecedented payouts for Musk while diluting shareholder stakes [1][3]. Summary by Sections Compensation Package Concerns - Glass Lewis & Co. has labeled Musk's compensation package as "excessively dilutive," estimating that it could reduce existing shareholders' ownership by approximately 11.3% if fully exercised [3]. - The package is valued at $141.6 billion, significantly higher than Tesla's own estimate of $87.8 billion, and could allow Musk to gain substantial compensation and ownership even if he meets only one of the twelve performance milestones [3][4]. Governance and Oversight Issues - The report raises concerns about the independence of Tesla's board and its oversight of Musk's pay, highlighting long-standing personal and professional ties between board members and Musk [5][6]. - This dynamic was previously noted in a Delaware court ruling that invalidated Musk's 2018 pay package due to compromised approval processes [6]. Performance and Focus Questions - Glass Lewis questions whether Musk can maintain focus on Tesla amidst his other ventures, such as SpaceX and Neuralink, suggesting that the size of the award could lead to significant compensation without achieving the expected performance [11]. - The early milestones set in the package do not appear as challenging as the size of the proposed tranches would imply, indicating that Musk could unlock substantial value without delivering exceptional performance [11]. Company Response - Tesla has publicly criticized the recommendations from ISS and Glass Lewis, claiming that their opposition is misguided and that shareholders have benefited from ignoring such advice [12]. - Cathie Wood, founder of ARK Invest, believes the compensation plan will pass decisively despite the opposition from proxy firms and index funds [12].