The ongoing saga surrounding Elon Musk’s compensation packages continues to captivate investors, analysts, and the public alike. With the upcoming Tesla Annual Shareholder Meeting scheduled for November 6, 2025, at Giga Texas, the stakes have never been higher. Musk’s proposed 2025 performance award has sparked intense debate, particularly among large institutional investors like Calpers and Norway’s sovereign wealth fund. As the vote approaches, the implications of these decisions could shape Tesla’s future trajectory significantly.
As one of the largest pension funds in the United States, the California Public Employees’ Retirement System (Calpers) holds a powerful position in this debate. Their recent announcement of opposition to Musk’s performance award reflects deeper concerns about corporate governance, compensation equity, and shareholder influence. This article delves into the various perspectives surrounding Musk’s ambitious compensation plan and its potential consequences for Tesla and its shareholders.
Reasons behind Calpers’ opposition to Musk’s performance award
Calpers has been vocal about its concerns regarding Musk’s proposed pay package, which they argue is excessively generous compared to other CEOs in similar roles. According to a statement shared with Bloomberg News, a spokesperson highlighted that the proposed award is “larger than pay packages for CEOs in comparable companies by many orders of magnitude.” This disproportionate scale raises questions about the concentration of power among shareholders, particularly when one individual holds such a significant stake in the company.
Calpers currently owns approximately 5 million shares of Tesla, giving it a substantial voice in the upcoming vote. This isn’t the first time Calpers has opposed Musk; the fund previously voted against a $56 billion pay package and criticized Musk’s 2018 performance-based plan, which was deemed overly ambitious and unrealistic. Ultimately, this plan was struck down by a Delaware court, although Tesla is still appealing that decision.
Musk’s 2025 CEO performance award: An overview
Elon Musk’s 2025 performance award has ambitious targets that, if met, would make him a trillionaire. The plan stipulates that Musk will not receive any compensation unless Tesla achieves aggressive operational and financial goals. For instance, Musk would need to elevate Tesla’s market capitalization from its current $1.1 trillion to an astounding $8.5 trillion, positioning Tesla as the most valuable company globally.
In addition to the market cap milestone, Musk’s pay package is contingent upon several other ambitious targets, including:
- Increasing annual operating profits from $17 billion to $400 billion.
- Achieving 20 million cumulative vehicle deliveries.
- Gaining 10 million Full Self-Driving subscriptions.
- Producing 1 million Tesla Bots and operating Robotaxis.
Musk has emphasized that the purpose of the performance award extends beyond financial gain; it aims to solidify his controlling stake in Tesla. He expressed concerns about being ousted by activist shareholders who do not hold Tesla shares, asserting, “If I can just get kicked out in the future by activist shareholder advisory firms who don’t even own Tesla shares themselves, I’m not comfortable with that future,” in a post on X.
Norway’s sovereign wealth fund and its stance
Norway’s $2 trillion sovereign wealth fund, managed by Norges Bank Investment Management (NBIM), has also voted against Musk’s performance award. Holding a 1.14% stake in Tesla valued at approximately $11.6 billion, NBIM’s opposition is significant and reflects broader investor concerns.
According to a report by CNBC, NBIM’s decision was based on several factors:
- The overall size of Musk’s pay package.
- Concerns about shareholder dilution.
- The absence of measures to mitigate key person risk.
While acknowledging Musk’s leadership and the value he has generated for Tesla, NBIM has committed to seeking constructive dialogue with Tesla regarding these issues. They stated, “While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk- consistent with our views on executive compensation.”
Investors divided: Perspectives on Musk’s pay package
Musk’s proposed compensation has generated a polarized response among institutional investors. Proxy advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis have recommended shareholders vote against the deal. Conversely, notable investors like ARK Invest and the Florida State Board of Administration have urged support for Musk’s compensation plan, emphasizing its potential benefits.
Michael Dell, the CEO of Dell Technologies, has weighed in on the matter, emphasizing that Musk’s compensation is contingent upon meeting challenging targets. Dell noted, “Vote FOR Elon Musk. The award is only achieved IF he hits exceptionally ambitious market-cap and operational milestones—if he falls short, he gets nothing.” This perspective highlights the risk-reward structure of Musk’s pay plan, suggesting that shareholders stand to gain significantly if Musk successfully navigates these hurdles.
Support for Musk from ARK Invest
Cathie Wood, CEO of ARK Invest and one of Musk’s staunchest supporters, has reiterated her confidence in his leadership and the resulting benefits for Tesla. Wood has argued that Musk’s ability to attract top talent and innovate positions Tesla to disrupt various industries effectively. She stated, “Elon Musk is the most productive human being on earth. And a human being who attracts incredible talent, people who want to solve the world’s hardest problems.” Wood believes that Musk’s success is a win-win for all stakeholders involved.
ARK Invest’s backing is significant, especially considering that Tesla represents the firm’s largest holding, with approximately $1 billion invested in TSLA shares. Wood has previously expressed that the approval of Musk’s performance award could catalyze “super-exponential growth” for Tesla, especially as new products like the Cybercab and Optimus expand the company’s offerings.
Conclusion: The impact of the upcoming vote
The upcoming vote at Tesla’s Annual Shareholder Meeting on November 6 will undoubtedly have far-reaching implications. The decisions made regarding Musk’s performance award will reflect broader themes in corporate governance, shareholder rights, and executive compensation.
As institutional investors continue to voice their opinions, the tension between ambitious growth targets and responsible governance will remain a focal point. With perspectives varying from strong support to critical opposition, the outcome of this vote could redefine the parameters of executive compensation in the tech and automotive industries alike. Investors and analysts alike will be closely monitoring the results, as they may signal a shift in how companies structure their executive pay packages in the future.