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Institutional Shareholder Services, one of the world's most influential proxy advisory firms, recommended that Tesla Inc. (NASDAQ:TSLA) shareholders vote against CEO Elon Musk's proposed compensation plan worth nearly $1 trillion.
In its report, ISS said the "mega performance equity award" proposed for Musk "has an astronomical grant value conditioned upon far-reaching performance targets that, if achieved, would create enormous value for shareholders," reported CNBC.
Despite that potential, ISS cited "unmitigated concerns surrounding the special award's magnitude and design."
If approved, the plan would become the largest CEO compensation package ever granted by a public company, potentially increasing Musk's stake in Tesla by 12% if the automaker reaches a market capitalization of $8.5 trillion and other ambitious goals.
In a post on X, formerly Twitter, Tesla pushed back sharply, saying that ISS "missed fundamental points of investing and governance" and reminded investors that "Elon receives nothing unless shareholders win big."
The recommendation follows a Delaware court decision last year striking down Musk's previous $56 billion pay package from 2018, ruling that the Tesla board had improperly granted the award and withheld key details from shareholders.
Tesla has appealed that ruling to the Delaware Supreme Court, with oral arguments held this week.
Tesla's board chair, Robyn Denholm, previously defended the new plan. The company urged shareholders to vote with the board on all 2025 proxy proposals.
Musk's supporters, including venture capitalist Chamath Palihapitiya, have argued the compensation is performance-based and reflects the scale of Tesla's global innovation. Critics, such as Sen. Bernie Sanders (I-Vt.), blasted it as insane, saying it could make Musk wealthier than "the bottom 59% of Americans combined."
The 2025 annual shareholder meeting is scheduled for Nov. 6, when investors will cast their final vote on Musk's pay plan.
Benzinga's Edge Stock Rankings indicate that TSLA demonstrates robust performance across short, medium, and long-term timeframes, with additional details available for investors.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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