Take Back Tesla campaign urges shareholders to reject Musk $1 trillion pay plan
News Summary
Tesla shareholders are being urged to vote against a new pay package for CEO Elon Musk, valued at nearly $1 trillion in stock, after a coalition of unions and corporate watchdogs launched a "Take Back Tesla" campaign. The proposed plan would also expand Musk's control over the company. The coalition calls the "outsized" package "outrageous," arguing that Musk's political activities have damaged Tesla's brand and distracted him from leadership. The campaign also encourages the general public to petition state treasurers and other financial officers to reject the plan on behalf of workers and retirees. Top proxy firms ISS and Glass Lewis have also recommended against authorizing the pay plan. This proposal comes amid a tense battle over Musk's previous 2018 pay package, worth about $56 billion, which was ruled improperly granted by the Delaware Court of Chancery, a decision Musk is appealing. New York City Comptroller Brad Lander "vociferously opposes" the new package, citing an "insufficiently independent" Tesla board and Musk acting as an "absentee CEO." Lander also noted Tesla's failure to hit targets for robotaxis and self-driving technology.
Background
In early 2024, the Delaware Court of Chancery ruled that Elon Musk's 2018 pay package, valued at approximately $56 billion, was improperly granted, citing that Tesla withheld crucial details from shareholders and that Musk controlled board members rather than negotiating fairly. Musk has appealed this ruling to the Delaware State Supreme Court. Following the rescission of the 2018 plan in January 2024, Musk stated on his social network X that he was "uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control." He subsequently launched the artificial intelligence startup xAI in March 2023, taking some former Tesla employees with him. Tesla's stock, despite a recent rally, has underperformed its tech peers and major indices in 2025 after a brutal start to the year.
In-Depth AI Insights
1. Beyond immediate financial concerns, what strategic implications does this prolonged governance dispute and Musk's personal brand volatility pose for Tesla's long-term market position, especially in competitive sectors like AI and robotics? - Erosion of Investor Confidence: The ongoing legal battles and "absentee CEO" accusations risk deterring institutional investors and potentially retail shareholders, who prioritize stable governance and focused leadership. This could impact future capital raising or valuation multiples. - Competitive Disadvantage in Talent: Musk's divided attention and the perception of governance issues might make it harder to attract and retain top-tier talent in highly competitive AI and robotics fields, where dedicated leadership and a clear corporate vision are crucial. - Brand and Regulatory Risk: The continued controversy surrounding Musk's political activities and personal brand could exacerbate brand reputational risks and potentially invite stricter regulatory scrutiny, especially during the Trump administration, where corporate accountability and executive compensation may draw heightened public attention. 2. How might the rejection of this pay package impact Musk's stated goal of securing 25% voting control to drive Tesla's AI and robotics ambitions? Could it accelerate a shift of resources and focus towards other ventures like xAI? - Impeded Equity Consolidation: A rejection would thwart Musk's plan to gain an additional 12% voting stake through this package, making his goal of 25% control harder to achieve. This could compel him to seek alternative (and potentially more contentious) ways to consolidate control. - Resource Reallocation: Unable to secure desired control within Tesla, Musk might further divert resources, key talent, and personal energy towards his AI ventures like xAI, where he already commands greater control. This could dilute Tesla's competitive edge in these emerging fields and translate into stronger potential conflicts of interest between xAI and Tesla. - Strategic Pivot: This outcome could accelerate Tesla's transformation from an innovation-driven tech company to a more traditional automotive manufacturer, with its cutting-edge AI and robotics ambitions largely pursued in Musk's privately controlled entities, thus impacting Tesla's long-term growth narrative and valuation. 3. Given strong opposition from major institutional shareholders, influential proxy advisory firms, and significant public fiduciaries like the NYC Comptroller, what are the underlying motivations for Tesla's board to push such an outsized pay package? What corporate governance dynamics does this reflect? - Continued Evidence of Insufficient Board Independence: The board's persistence with this package, even against significant opposition, further validates Comptroller Lander's accusation of an "insufficiently independent" board that fails to effectively check Musk. This suggests a board that may prioritize Musk's personal desires over collective shareholder interests and best governance practices. - Critical Talent Locking: The board's ostensible motivation to lock in Musk for a decade indicates a belief in his indispensability and the criticality of his leadership for Tesla's future growth, especially in innovative areas. This dependency likely drives the board's willingness to accept an uncommonly high cost and controversial governance structure. - Fundamental Disagreement on Risk-Reward Trade-off: There's a fundamental divergence between the board and institutional investors regarding the assessment of Musk's importance to Tesla's future performance and how his compensation should be aligned with company success. The board may believe the potential upside of retaining Musk outweighs governance flaws, while external investors perceive the risks as too high.