Securities Regulation Daily Wrap Up, EXECUTIVE COMPENSATION—State, city treasurers lobby against Elon Musk’s proposed $1 trillion performance award, (Oct 21, 2025)
Organizations Mentioned:Tesla | Tesla Motors, Inc.
By Suzanne Cosgrove
Tesla’s annual shareholders meeting is slated for November 6; its third-quarter earnings are due Wednesday after the market close.
In a letter to Tesla, Inc. shareholders written earlier this month, a group of seven state treasurers and the comptroller of the City of New York called for better company oversight along with a reconstituted board – and for shareholders to hold the line on a proposed performance award for Tesla’s CEO Elon Musk when they meet next month.
Modelled after the 2018 CEO Performance Award, the 2025 Performance Award purports to establish “demanding operational and financial targets” for Musk, in exchange for an exceptional pay package that would reportedly total $1 trillion in shares.
“For such an unprecedented payday, we would have hoped to see performance targets genuinely unprecedented in their rigor,” the state treasurers wrote. “Unfortunately, we are again disappointed by the Board’s performance, as they have in fact adopted performance targets that are in many cases vague, undemanding, and subject to significant discretion by what we believe is a non-independent Board.”
Three board members opposed. Calling Tesla’s performance “erratic,” the state treasurers also complained the company’s board has failed to provide meaningful oversight of management. “The Board’s relentless pursuit of retaining its CEO seems to have harmed the Company’s reputation,” has led to extraordinarily high levels of executive compensation, and has delayed progress on meeting key company goals like full self-driving (FSD) vehicles, they stated.
Voting against the three Tesla directors who are up for election this year -- Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson -- and opposing the Amended and Restated 2019 Equity Incentive Plan (the A&R 2019 Equity Plan), as well as the 2025 CEO Performance Award (the 2025 Performance Award), is justified in order to preserve long-term shareholder value for all Tesla shareholders, they said.
Proxy firms also urge “no” vote. The state treasurers are not alone in their pushback against Tesla’s proposals. Reuters reported last week that the influential proxy advisor firm Institutional Shareholder Services urged shareholders to vote "no" on Musk’s pay package, and on Monday week Glass Lewis & Co. also advised Tesla stockholders to reject the proposal.
Debate over Musk’s compensation plan is not unprecedented. Tesla's board unanimously approved a massive compensation plan for Musk in January 2018, provided Tesla met certain market capitalization and operational milestones under his leadership. Under the proposed plan, Musk could have received up to $55.8 billion, but a Delaware Chancery judge rescinded the compensation package in January 2024, ruling that it was excessive.
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