Tesla’s board is ready to vote on CEO Elon Musk’s $1 trillion pay bundle as main proxy adviser corporations urge shareholders to reject the deal.
The vote is scheduled for Thursday and can decide whether or not Musk secures what’s the largest compensation bundle in company historical past.
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Proxy corporations Glass Lewis and Institutional Shareholder Companies have both recommended that traders vote towards the bundle. These corporations usually affect massive passive funds that maintain vital stakes within the electrical carmaker.
Tesla has confronted mounting challenges this yr, with world gross sales declining and investor confidence wavering.
In July, Tesla reported a 13.5 percent decline in sales in the United States. They jumped 7.4 percent in the third quarter ending in September compared with the identical interval the yr earlier than, as US shoppers scrambled to benefit from a $7,500 EV tax credit score that was set to run out that month.
Nonetheless, world gross sales are additionally on the decline. New automobile registrations fell by 89 % in Sweden, 31 % in Spain, and 59 % in neighbouring Portugal in October.
Political exercise harm Tesla model
That stress is compounded by Musk’s political profile. A former ally of US President Donald Trump, he was appointed head of the Division of Authorities Effectivity, the place he advocated for sweeping layoffs throughout the federal workforce, the most important employer within the US.
Musk’s political exercise has harm Tesla’s model whereas boosting its opponents. Between October 2022 and April 2025, gross sales of different electrical and hybrid vehicles rose by 22 %, in line with a examine by the Nationwide Bureau of Financial Analysis. The examine estimated that if Musk had stayed out of politics, Tesla’s gross sales may have been larger by 67 % to 83 % — equal to roughly 1 million to 1.26 million extra autos.
Regardless of these headwinds, Tesla board Chair Robyn Denholm has warned that rejecting the pay bundle may danger Musk’s departure. In a letter to shareholders final week, she mentioned Musk’s management “is vital to the model’s success”.
Analysts agree that Tesla’s future is determined by Musk’s continued involvement.
“It’s a watershed second that we count on Musk to get the pay bundle by a large margin. Musk is essential to Tesla’s AI ambitions. Musk is Tesla and Tesla is Musk,” Dan Ives, an analyst at Wedbush Securities, advised Al Jazeera.
“Musk is a wartime CEO, and nobody else will ever fill his footwear at Tesla. [This is the] most necessary chapter of progress for Tesla ever with the AI Revolution, regardless of Musk’s political baggage.”
Tesla has doubled down on investments in AI know-how. It’s constructing out what it calls its Optimus humanoid robotic know-how, which the corporate hopes to launch late subsequent yr.
Efficiency metrics
Musk’s pay package hinges on his performance. It consists of 12 formidable market-cap targets, requiring the corporate to succeed in $8.5 trillion in valuation inside a decade, beginning with $2 trillion. Tesla’s market cap is at $1.48 trillion for the time being,
The efficiency metrics additionally embody 20 million automobile deliveries, 1 million AI bot gross sales, and 1 million driverless robotaxis over that interval, with deliveries going down on all fronts for 3 consecutive months. Final yr, the corporate bought simply lower than 2 million autos.
Musk earns extra shares as every milestone is met. He should additionally stay CEO or maintain one other executive-level position over the course of the 10-year programme.
Critics argue the plan doesn’t incentivise Musk to refocus on Tesla, as he was accused earlier this yr of neglecting firm tasks amid his time spent in Washington, DC.
“Let’s be candid: Elon Musk is already one of many richest individuals on this planet. His present stake in Tesla, [which is worth] tens of billions of {dollars}, ought to usually be incentive sufficient to drive efficiency. The concept one other large fairness award will by some means refocus a person who’s hopelessly distracted is each illogical and opposite to the proof,” Democratic New York State Comptroller Thomas DiNapoli, who controls 3.3 million shares by means of New York State’s pension fund, mentioned in remarks on Monday.
Amid slumping gross sales and rising political controversy, Musk’s public picture has deteriorated quickly. One issue cited for the dip in gross sales was Musk’s affect on the model’s public picture.
In February, a Gallup ballot discovered Musk was seen favourably by 43 % of People and unfavourably by 47 %.
By August, he was ranked probably the most unpopular influential determine amongst People, with a beneficial ranking of 33 % and an unfavourable ranking of 61 % — trailing solely US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu, who has been accused of warfare crimes.
Nonetheless, Ives says, the blows to Musk’s picture are unlikely to sway traders.
“Traders need Musk as CEO for the subsequent decade, and so they view optics as noise,” Ives mentioned.
Tesla didn’t reply to Al Jazeera’s request for remark.
On Wall Road, Tesla inventory is up 4.3 % to $463.79 as of 2pm in New York. During the last yr, it has risen 84.4 %.
