Tesla’s proposed $1 trillion compensation plan for CEO Elon Musk has sparked renewed investor scrutiny as proxy adviser Institutional Shareholder Services (ISS) recommended shareholders vote against the historic pay deal. The proposal, unveiled in September 2025, could be the largest corporate pay package ever awarded to a company chief.
ISS Urges Investors to Reject Musk’s Pay Package
On Friday, ISS advised Tesla investors to vote against Musk’s 2025 pay plan, marking the second consecutive year the advisory firm has opposed a compensation package for the CEO. ISS highlighted concerns over the plan’s unprecedented scale and the limited ability of Tesla’s board to adjust future payouts.
“The 2025 pay package locks in extraordinarily high pay opportunities over the next ten years and reduces the board’s ability to meaningfully adjust future pay levels,” ISS said.
The ISS recommendation carries weight with institutional investors, including passive funds that hold large stakes in Tesla. Its guidance comes ahead of a November 6 shareholder meeting that will determine the fate of Musk’s record-breaking compensation plan.
Tesla’s Pay Plan Details
Tesla’s board proposed the $1 trillion plan to retain Musk and reward his contributions to the company’s growth. The package is performance-based, with ambitious targets that include:
- Tesla reaching an $8.5 trillion market capitalization
- Delivery of 20 million vehicles annually
- Production of one million robotaxis
- Achieving $400 billion in adjusted core earnings
Even if Musk falls short of all goals, the plan’s structure allows partial achievement payouts, potentially granting tens of billions of dollars. ISS valued the stock-based award at $104 billion, exceeding Tesla’s estimate of $87.8 billion.
Unlike his 2018 pay deal, Musk will now be allowed to vote his 13.5% stake, increasing the likelihood of shareholder approval despite ISS objections.
Investor and Market Reactions
Despite the pushback, Tesla shares have risen following the announcement, up 2.4% as of 3:45 PM ET. Investors believe the package will incentivize Musk to focus on long-term strategy and innovation. Tesla director Kathleen Wilson-Thompson emphasized that retaining Musk is critical to attracting and keeping top talent:
“Many people come to Tesla specifically to work with Elon… retaining and incentivizing him will help us recruit better talent in the long run.”
ISS, however, criticized the plan’s astronomical size, partial goal payouts, and potential dilution for current shareholders.
The Controversy Surrounding Musk’s Pay
This latest debate follows a Delaware court ruling earlier this year that voided Musk’s previous $56 billion pay package. Critics argue that the $1 trillion proposal may be excessive and could undermine shareholder confidence, while supporters maintain that it aligns Musk’s incentives with Tesla’s long-term growth.
What’s Next
The November 6 shareholder meeting will be pivotal in determining whether Musk’s compensation plan passes. With Musk’s voting power and strong support from Tesla insiders, approval remains possible despite ISS’s recommendation. Analysts will be watching closely, as the outcome could influence executive compensation trends across the tech and automotive sectors.
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