Ahead of a high-stakes shareholder vote, Tesla defends a $1tn pay plan for Elon Musk as critics call it excessive and risky

Tesla has launched an extraordinary campaign to convince investors that its billionaire boss, Elon Musk, is worth a $1 trillion payday. Ahead of its annual general meeting in Austin, Texas, the company is urging shareholders to approve a massive new pay package that would make Musk the world’s first trillion-dollar CEO.

The electric carmaker has taken out digital adverts, produced slick promotional videos, and even launched a website, VoteTesla.com, to persuade investors that Musk’s leadership is indispensable. In one video, board chair Robyn Denholm and director Kathleen Wilson-Thompson praise him over swelling orchestral music, calling his vision “unmatched.”

Musk has personally raised the stakes, warning his millions of followers on X, the social media platform he owns, that the outcome “could affect the future of civilisation.” He has also reposted endorsements from powerful backers, including Dell founder Michael Dell, investor Cathie Wood, and his brother Kimbal Musk, who sits on Tesla’s board and called Elon “irreplaceable.” Musk replied simply, “Thanks, bro ❤️.”

But many shareholders are far less enthusiastic. Critics see the proposed deal as another example of Tesla’s growing obsession with its celebrity CEO at a time when car sales are slipping and competition in the electric vehicle market is intensifying. “It’s amazing to see a company struggling to sell cars spending money to sell a pay package,” said Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management. “Tesla needs to refocus on building and selling EVs, not on Elon’s ego.”

Under the proposed deal, Musk would not receive an immediate $1 trillion salary. Instead, the package ties his potential payout to Tesla’s future success. If he manages to lift Tesla’s market value from its current $1.4 trillion to $8.5 trillion and roll out one million self-driving “robotaxis,” he would be awarded 423.7 million new shares worth roughly $1 trillion at that valuation.

The plan echoes Musk’s previous pay arrangement, which was approved by shareholders in 2018 and ultimately netted him tens of billions of dollars after Tesla’s value soared. But that deal was struck down earlier this year by a Delaware judge who ruled that the company’s board was too personally and financially entangled with Musk to negotiate independently. The Delaware Supreme Court is now reviewing that decision even as Tesla pursues this new, even bigger package.

Corporate governance experts have described the move as highly irregular. “Tesla is effectively running a political campaign to secure executive compensation,” said Columbia Law School professor Dorothy Lund. “It’s not something I’ve ever seen before.”

Major institutional investors have lined up against the plan. Proxy advisory firms Glass Lewis and Institutional Shareholder Services have urged clients to vote no, arguing the package is “excessive” and would dilute shareholder value. Norway’s sovereign wealth fund, the world’s largest, and the California Public Employees’ Retirement System, the biggest US pension fund, have also opposed the deal. New York State Comptroller Thomas DiNapoli has gone further, urging shareholders to vote against re-electing board members for “failing to provide independent oversight.”

Tesla’s board insists the company cannot afford to lose Musk, arguing that he “singularly possesses the leadership characteristics necessary to realise its long-term mission.” Supporters agree that his bold ideas have driven Tesla’s success and inspired a global movement toward electric vehicles.

But Musk’s detractors say his erratic political commentary, fixation on robotics and AI, and ownership of X have distracted from Tesla’s core business. “The role of a board is to represent shareholders, not to act as a fan club for the CEO,” said Yale economist Matthew Kotchen, who recently co-authored a study linking Musk’s public controversies to damage to Tesla’s brand.

The outcome of Thursday’s vote remains uncertain. Analysts say Musk’s unusually loyal army of retail investors—who own a large portion of Tesla stock and tend to back him unconditionally could prove decisive. Institutional resistance, however, remains strong.

Morgan Stanley analyst Adam Jonas has called the AGM “one of the most important events in Tesla’s history,” warning there is a “distinct possibility” the package could fail. Others believe Musk’s track record of defying expectations could yet win the day.

“Elon Musk is one of the most polarising figures in modern business,” said Edmunds analyst Jessica Caldwell. “But even his critics can’t deny that his charisma and ambition have propelled Tesla further than anyone thought possible.”

Whether Tesla’s shareholders agree that vision is worth $1 trillion will soon become clear. The decision could shape not only Musk’s fortune but also the future direction of one of the world’s most influential companies.