Tesla’s board of directors is set to vote on CEO Elon Musk’s $1 trillion compensation proposal as a major proxy advisory firm urges shareholders to reject the deal.
A vote is scheduled for Thursday to determine whether Mr. Musk secures the biggest paycheck in the company’s history.
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Proxy voting firms Glass Lewis and Institutional Shareholder Services both recommended investors vote against the package. These companies often influence large passive funds that hold large stakes in electric car manufacturers.
Tesla has faced serious challenges this year, including declining global sales and wavering investor confidence.
Tesla reported a 13.5% decline in U.S. sales in July. Prices rose 7.4% year-over-year in the third quarter ending in September as U.S. consumers scrambled to take advantage of the $7,500 EV tax credit that expired that month.
However, global sales are also on the decline. New car registrations in October fell by 89% in Sweden, 31% in Spain and 59% in neighboring Portugal.
Political activity hurts Tesla’s brand
That tension is exacerbated by Musk’s political profile. The former ally of US President Donald Trump was appointed head of the Department of Government Efficiency and advocated for sweeping layoffs of the entire federal workforce at America’s largest employer.
Musk’s political activities have hurt Tesla’s brand while boosting competitors. Sales of other electric and hybrid vehicles increased by 22% between October 2022 and April 2025, according to a study by the National Economic Research Bureau. The study estimated that had Mr. Musk stayed out of politics, Tesla’s sales could have increased by 67% to 83%, which would equate to about 1 million to 1.26 million additional vehicles.
Despite these headwinds, Tesla board chairman Robin Denholm warned that rejecting the pay package could jeopardize Musk’s resignation. In a letter to shareholders last week, he said Musk’s leadership was “critical to the brand’s success.”
Analysts agree that Tesla’s future depends on Musk’s continued involvement.
“This is a watershed moment where we expect Musk to win the salary by a wide margin. Musk is key to Tesla’s AI ambitions. Musk is Tesla and Tesla is Musk,” Wedbush Securities analyst Dan Ives told Al Jazeera.
“Mr. Musk is a wartime CEO, and there will be no one else to succeed him at Tesla. Despite Mr. Musk’s political baggage, (this) is Tesla’s most important chapter of growth to date through the AI revolution.”
Tesla has doubled its investment in AI technology. The company is developing what it calls Optimus humanoid robot technology, which the company hopes to launch late next year.
performance indicators
Musk’s salary depends on his performance. It includes 12 ambitious market capitalization targets, starting at a valuation of $2 trillion and requiring the company to reach $8.5 trillion within 10 years. Tesla’s market capitalization is currently $1.48 trillion.
Performance indicators also include 20 million vehicle deliveries, 1 million AI bot sales, and 1 million driverless robotaxis during the same period, with deliveries across all sectors for the third consecutive month. Last year, the company sold just under 2 million vehicles.
Mr. Musk earns additional shares each time a milestone is achieved. They must also remain as CEO or move into another executive-level role throughout the 10-year program.
Critics argue that the plan does not incentivize Musk to refocus his efforts on Tesla, after he was accused of ignoring the company’s responsibilities while in Washington, D.C., earlier this year.
“Frankly, Elon Musk is already one of the richest people in the world, and his Tesla stock, worth tens of billions of dollars, would normally be enough of an incentive to perform well. The idea that another huge stock award would somehow refocus a hopelessly distracted individual is illogical and contrary to the evidence,” said Democratic New York Comptroller Thomas DiNapoli, who controls 3.3 million New York shares. the pension fund said in a comment on Monday.
Musk’s public image deteriorated rapidly following sluggish sales and mounting political controversy. One of the factors cited for the decline in sales was the impact Mr. Musk had on the brand’s public image.
A February Gallup poll found that Musk was viewed favorably by 43% of Americans and unfavorably by 47%.
By August, he was ranked the most unpopular influencer among Americans, with a 33% favorable rating and 61% unfavorable rating, followed by US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu, who has been accused of war crimes.
But Ives said the blow to Musk’s image is unlikely to sway investors.
“Investors want Musk to be CEO for the next 10 years and view the optics as noise,” Ives said.
Tesla did not respond to Al Jazeera’s request for comment.
On Wall Street, Tesla shares rose 4.3% to $463.79 as of 2 p.m. in New York. Last year, it rose 84.4%.
