Taking Tesla to Task: Shareholders Rally Against Musk’s Pay Package
3 October 2025
Shareholders at US electric vehicle (EV) manufacturer Tesla have sent a letter urging fellow investors to vote against CEO Elon Musk’s proposed U$1 trillion pay package and to oppose the re-election of three directors at the company’s AGM next month.
The letter calls on Tesla’s shareholders to oppose the re-election of Directors Ira Ehrenpreis, Joe Gebbia and Kathleen Wilson-Thompson (Proposal 1), the Amended and Restated 2019 Equity Incentive Plan (Proposal 3) and the 2025 CEO Performance Award (Proposal 4) at its AGM on 6 November.
“Since the last annual meeting, we have unfortunately witnessed both the erratic performance of Tesla the Board’s failure to provide meaningful real-time oversight of management,” the letter read. “The Board’s relentless pursuit of retaining its CEO seems to have harmed the company’s reputation, led to extraordinarily high levels of executive compensation, and delayed progress on meeting key goals like full self-driving.”
It added that “these pay packages provide so much discretion to Tesla’s Board that shareholders cannot be confident of impartial treatment [and] there is an urgent need to address these issues to preserve long-term shareholder value for all Tesla shareholders”.
The letter also highlights Tesla’s frequently fluctuating share price, stating that since the company’s 2024 AGM that its “operational and financial performance has been negative and highly volatile”. The letter details that to Musk’s purchase of 96 million Tesla shares on 12 September 2025, Tesla’s share price was still 27% below its 2024 peak, with the “extremely volatile” stock having gained or lost at least 5% on 33 separate days since the beginning of this year.
It was sent by shareholders including New York City Comptroller Brad Lander on behalf of the New York City Employees’ Retirement System, the New York City Teachers’ Retirement System, and the New York City Board of Education Retirement System and Comptroller of Maryland Brooke E. Lierman. The letter was additionally signed by the State Treasurers of Colorado, Nevada and New Mexico, as well as SOC Investment Group and SHARE (Shareholder Association for Research and Education).
This week, Tesla called on shareholders to support the proposal granting Musk’s significant pay package in a post on X. “At our Annual Meeting on November 6, Tesla shareholders can vote on a pay-for-performance plan designed to drive our next era of transformational growth and value creation,” the company stated. “Seven years ago, Elon Musk had to deliver billions to shareholders – now it’s trillions. This plan creates a path for Elon to secure voting rights and will retain him as a leader of the company for many years to come. But […] Elon only receives voting rights after he has delivered economic value to you.”
Tesla announced its 2025 AGM will take place on 6 November in July, almost four months after the latest the company was supposed to hold its annual shareholder meeting under local laws, as reported by Minerva Analytics. Under Texas law, where Tesla is headquartered, the company is expected to hold an annual shareholders’ meeting within thirteen months of its last meeting. Tesla’s 2024 AGM took place on 13 June meaning the 2025 AGM should have taken place by 13 July this year.
SHARE had coordinated a group of Tesla shareholders representing more than U$1.5 trillion in AUM in sending a letter to Tesla’s Board of Directors which demanded that company announce the date of its next AGM. The letter was signed by investors including Akademiker Pension, Ethos Foundation, the New York City Comptroller, University Pension Plan and Velliv.
SHARE additionally cited a coalition of seven US state treasurers, as well as other treasurers, that collectively overseeing hundreds of millions of dollars of investment in Tesla calling on the company to strengthen board accountability and improve transparency to shareholders.
Separately, a group of institutional shareholders with 7.9 million shares writing to the Tesla board raising concerns about compensation, succession planning, outside board commitments and director independence in May, which was reported by Minerva Analytics.
The group of pensions fund investors at Tesla had sent a letter to the Chair of the company’s board demanding that CEO Elon Musk work at least 40 hours per week before any new compensation plan is approved. It was signed by 12 institutional investors collectively representing U$950 billion in AUM.
Musk has courted controversy from many quarters this year. This includes his prominent involvement with the infamous US Department of Government Efficiency, a high-profile fallout and split from US President Donald Trump, attempts to meddle in political affairs abroad – including in Germany and the UK – and the formation of a new political party. The latter saw Tesla shareholders’ concerns piqued and calls for Tesla’s board to curb the activities of Musk following the launch of the America Party. However, it has not been an entirely bad year for Musk, who has this week reportedly become the first person to reach a net worth of U$500 billion.
The shareholders sending the letter expressed concern that the Board “remains fixated on pleasing Mr. Musk, rather than responsibly addressing his many varied pursuits, at least some of which have come at the expense of Tesla shareholders”.
Last year, Tesla reincorporated in Texas from Delaware after a major pay package for CEO Musk was annulled by a judge in the latter state, who ruled that the pay package was “unfathomable”. Musk responded by posting “never incorporate your company in the state of Delaware” on social media.
“Like the Board, we cannot understate the importance of this year’s shareholder vote,” the letter stated. “If Proposals 3 and 4 are approved, this year may be one of the last times that public shareholders have a meaningful voice in the Company and its leadership given the level of dilution that is likely to take place. Beyond that, the Company’s own disclosures make clear that the motivation to deliver these pay packages is driven by increasing Mr. Musk’s voting power, with no formal commitment to focus his time, attention, and Tesla’s own resources on Tesla.
“Further, we lack confidence that this non independent Board can oversee the CEO toward a future that maintains stable and sustainable returns for Tesla shareholders,” it added. “Tesla is in need of truly independent board oversight of the CEO and better aligned pay practices.”
Tesla faces eight shareholder proposals at its upcoming AGM, seven of which company management has recommended a vote against. The only shareholder resolution that a case-by-case recommendation has been issued for is to request the Board to authorise an investment in xAI, the AI startup founded by Musk in 2023. Musk has previously lobbied for Tesla to invest in xAI, in July commenting that “if it was up to me, Tesla would have invested in xAI long ago”.
As showcased in Minerva Analytics’ Shareholder Proposal Voting Trends Report 2025 published this week, during the first five months of this year boards only issued case-by-case voting recommendations 5.7% of the time. A case-by-case recommendation saw a 55% pass rate during this period, meaning that the xAI-focused proposal has a reasonable chance of success.
As highlighted by the report, a case-by-case recommendation can be used as a middle ground, allowing the board of directors to leave the outcome in the hands of shareholders, while distancing themselves by avoiding a concrete recommendation. By not taking a clear position on a proposal, the board may appear to be tacitly supporting the proposal, especially if it is already getting attention and backing from others outside the company.
The other shareholder proposals include requesting the Board to: adopt targets and report on metrics assessing the feasibility of integrating sustainability metrics into senior executive compensation plans; take the steps necessary to amend the Bylaws so that a lower threshold for shareholder derivative suits; amend Article X of the Bylaws to require shareholder supermajority approval before adopting restrictions under Texas law; and first receive shareholder approval for any bylaw changes imposing stricter ownership or solicitation requirements for shareholder proposals.
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Last Updated: 3 October 2025