Tesla Investor Support for Musk Pay Package Weakened Since 2018

Tesla shareholders last week approved a record-breaking compensation package for CEO Elon Musk, potentially awarding him approximately $1 trillion in company stock over the next decade. While ultimately successful, the vote revealed a slightly more cautious sentiment compared to the overwhelming support Musk received for a similar pay plan in 2018.

According to an SEC filing released Friday, excluding holdings owned by board members and executives, approximately 66.9% of shares voted were in favor of the compensation package. This represents a decrease from the 73% support garnered for the 2018 plan, as analyzed by Andrew Droste, head of corporate governance at Columbia Threadneedle. This slight dip suggests a nuanced, though still largely supportive, view of Musk’s leadership amongst Tesla’s diverse investor base.

During the announcement of preliminary results at Tesla’s annual shareholder meeting on Thursday, the company stated the plan received approximately 75% support among voting shares. This figure included insiders such as Musk, who holds approximately a 15% stake in Tesla and was eligible to vote his shares.

Analysts suggest several factors contributed to the slight decline in support. Tesla experienced slower sales growth in the first half of 2025, attributed in part to concerns regarding Musk’s increasingly vocal political stances and potential conflicts of interest arising from his close ties to the Trump administration. Some observers also point to a perceived erosion of Tesla’s brand value within certain segments of the electric vehicle market as a contributing factor. This is happening as competitive pressure from legacy automakers and nimble EV startups intensifies.

Despite these headwinds, Droste argues the result still demonstrates “broad support for Elon among Tesla’s shareholder base.” In his view, the majority of investors consider Tesla and Elon Musk to be “inextricably linked,” and were “unwilling to risk his potential departure by allowing this vote to fail.” This highlights the significant influence Musk wields within Tesla and the perceived risk associated with any potential disruption to his leadership – a critical element of Tesla’s risk premium built into its stock valuation.

The Tesla board of directors had formally recommended shareholders approve the pay plan, initially proposed in September. However, leading proxy advisory firms like Glass Lewis and ISS advised investors to vote against the package, raising concerns about its size and potential impact on shareholder value.

The lucrative package for Musk, already the world’s wealthiest individual, consists of 12 tranches of stock options that will vest upon Tesla achieving ambitious milestones over the next decade. The initial tranche is triggered by Tesla reaching a market capitalization of $2 trillion, approximately $500 billion above its current valuation. These market capitalization targets are coupled with demanding operational objectives.

Even if Tesla doesn’t reach the most ambitious goals, Musk could still potentially receive over $50 billion by hitting a select few of the more attainable targets outlined in the new pay plan. Furthermore, the award terms include a list of “covered events” which would allow him to earn his shares even if the required operational milestones are not fully met. This provision has drawn criticism from some investors, who view it as providing Musk with an overly generous safety net.

The approved pay package underscores the unique position Musk holds at Tesla. Shareholders are betting that his continued involvement is essential for the company to achieve its ambitious growth targets in a rapidly evolving and increasingly competitive market. Whether this bet pays off remains to be seen, but the outcome will undoubtedly have significant implications for the future of Tesla and the broader electric vehicle industry.

Correction: A prior version of this story had an incorrect figure for the vote in support of the pay package.