ISS Urges Tesla Shareholders to Reject Musk’s $1 Trillion Pay Package

Institutional Shareholder Services (ISS) has taken a rare hardline stance against one of the most high-profile executive compensation plans in history, urging investors in Tesla (Zorrox: TSLA.) to vote against CEO Elon Musk’s proposed $1 trillion stock-based pay package. The recommendation, issued ahead of Tesla’s annual meeting on November 6, raises major concerns over governance, shareholder dilution, and Musk’s divided focus across his multiple ventures.

A Compensation Plan of Unprecedented Scale

Tesla’s board has put forward an aggressive, performance-based equity plan linking Musk’s rewards to a series of extraordinary milestones. To receive the full payout, Tesla would need to reach a market capitalization of $8.5 trillion — roughly six times its current value — deliver 20 million electric vehicles, deploy one million autonomous robotaxis, and achieve $400 billion in adjusted core earnings.

ISS, however, sees the structure as excessively generous and insufficiently safeguarded. In its advisory note, the firm called the plan “astronomical in size” and criticized it for allowing Musk to unlock substantial gains even if only partial goals are achieved. The report also pointed to Musk’s growing commitments to SpaceX, Neuralink, and xAI as factors that could limit his focus on Tesla’s day-to-day operations.

Another central objection is dilution. ISS estimates that the award, if fully vested, could significantly expand Tesla’s outstanding share count, effectively reducing existing shareholder value. The lack of mechanisms to re-evaluate the award over time or ensure sustained performance alignment added to the adviser’s opposition.

Tesla’s board fired back, arguing that the structure directly aligns Musk’s incentives with shareholder interests through milestone-based vesting. The company accused ISS of “fundamentally misunderstanding” its growth model and the purpose of the incentive design. Musk himself, who holds roughly 13% of Tesla’s shares, wields significant voting power that could still swing the outcome in his favor.

Governance and Market Stakes

The upcoming vote carries broad implications for both Tesla and corporate governance at large. A shareholder rejection would represent a rare public rebuke of Musk’s leadership and the board’s oversight practices. It could also inject uncertainty into Tesla’s valuation, which already embeds lofty assumptions about execution in EVs, energy storage, and autonomous driving.

If the plan passes, however, it could further cement Tesla’s reputation as a company willing to defy traditional governance norms to retain and motivate its founder. Investors will then shift focus to whether Musk can deliver on the massive operational goals underpinning the package — or whether the plan simply amplifies risk without corresponding returns.

The controversy also underscores a broader debate across Wall Street: whether the next phase of corporate growth justifies unprecedented executive rewards. ISS’s stance may embolden governance-driven investors to challenge other high-profile pay schemes in the technology and automotive sectors.

Key Dynamics for Investors

The shareholder vote on November 6 will be a pivotal moment. If the proposal is rejected, Tesla’s board would likely be forced to rework the structure or seek alternative incentive frameworks. Meanwhile, institutional giants like BlackRock and Vanguard, both influenced by ISS recommendations, could determine the final tally.

Beyond the vote, investors will watch Tesla’s earnings calls and forward guidance for signs of how these performance milestones integrate into operational strategy. Musk’s balancing act across his ventures will also remain a central question: can one individual realistically deliver on such wide-ranging goals without compromising focus?

Market response could hinge as much on perception as fundamentals. A decisive rejection might weigh on Tesla’s stock in the short term, while approval could extend volatility as traders reassess dilution and governance risk against long-term growth optimism.

Tips for Traders

• Monitor Tesla’s (Zorrox: TSLA.) shareholder vote results and follow-up statements — a rejection or delay could trigger immediate price swings.

• Watch ownership disclosures and insider filings for changes in Musk’s voting power or any institutional rebalancing.

• Track dilution metrics and option issuance closely, as these affect valuation sensitivity over the long term.

• Compare Tesla’s multiples against growth targets — if market confidence in execution fades, re-rating could accelerate.

• Consider event-driven options strategies ahead of the vote and in the days following the announcement — volatility is likely to spike either way.