Take Back Tesla campaign urges shareholders to reject Musk $1 trillion pay plan

A coalition of unions and corporate watchdogs, including the American Federation of Teachers, has launched the "Take Back Tesla" campaign, urging institutional investors to vote against a proposed nearly $1 trillion stock-based pay package for CEO Elon Musk. This initiative, supported by proxy firms ISS and Glass Lewis and New York City Comptroller Brad Lander, argues the package is excessive, distracts Musk from Tesla's operations due to his other ventures, and follows a Delaware court ruling that his previous $56 billion 2018 compensation was improperly granted. Critics highlight significant governance concerns, an "insufficiently independent" board, and Tesla's underperforming stock relative to tech peers, while Tesla's board maintains the package is crucial to retain Musk and has dismissed proxy firm objections, setting the stage for a contentious shareholder vote ahead of the company's earnings report.

Analysis

A significant governance challenge is emerging for Tesla (TSLA) as a coalition of unions and corporate watchdogs, including the American Federation of Teachers, actively campaigns against CEO Elon Musk's proposed ~$1 trillion stock-based pay package. This initiative, dubbed "Take Back Tesla," urges shareholders to reject the plan, which would expand Musk's control, with leading proxy advisory firms ISS and Glass Lewis also recommending against authorization. Critics, such as NYC Comptroller Brad Lander, view the package as "outrageous" and indicative of an "insufficiently independent" board.

The current controversy is exacerbated by the Delaware Court of Chancery's prior ruling that Musk's 2018 $56 billion compensation was improperly granted due to hidden details and board control. Musk's appeal of this decision and his stated desire for ~25% voting control to advance Tesla in AI and robotics, alongside his involvement in xAI and Grok, raise concerns about potential distractions and his commitment to Tesla's core operations. The proposed plan would add 12% to his stake over a decade.

These governance concerns coincide with Tesla's recent stock underperformance against tech peers, the S&P 500, and Nasdaq in 2025, despite a recent rally. Comptroller Lander specifically cited Tesla's failure to meet robotaxi and self-driving technology targets. Ahead of its Q3 earnings report, analysts anticipate 4.7% year-over-year revenue growth to $26.37 billion, following two consecutive quarterly declines, highlighting fundamental performance pressures alongside the leadership debate.

Key Decisions for Investors

• Monitor the outcome of the shareholder vote on Elon Musk's proposed pay package, as its approval or rejection will significantly signal corporate governance strength and investor confidence in Tesla's board.
• Evaluate Tesla's Q3 earnings report for signs of fundamental improvement, particularly revenue growth and profitability, considering the stock's underperformance relative to peers and the ongoing leadership distractions.
• Assess the long-term implications of Musk's divided attention across multiple ventures, including xAI, and its potential impact on Tesla's strategic direction and execution in core automotive and AI initiatives.