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Elon Musk with a red Tesla and text about his $1 trillion compensation plan.
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Tesla CEO Urges Shareholders to Approve $1 Trillion Compensation Plan After Q3 Earnings Miss

Rachel Patel
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Musk Urges Investors to Approve $1 Trillion Pay Plan

During Tesla's earnings call, Elon Musk requested approval for a $1 trillion compensation plan, while criticizing advisory firms opposed to it. He emphasized the need for balanced control to maintain accountability.

  • Elon Musk proposes $1 trillion pay package
  • Critiques shareholders' advisory firms
  • Calls for sufficient voting control
  • Insists on accountability for leadership
  • Remarks made during Tesla earnings call
  • Musk is the world's richest person

Tesla Chief Executive Officer Elon Musk concluded the October 22, 2025 earnings call by pressing investors to support a conditional stock award worth up to $1 trillion if the company achieves rigorous market-capitalization and operational goals.

Why Musk Framed Voting Control as Strategic Priority

Elon Musk argued that retaining “enough voting control to give a strong influence, but not so much that I can’t be fired if I go insane” is vital for advancing Tesla’s artificial intelligence and robotics businesses. He blasted proxy advisers Institutional Shareholder Services and Glass Lewis for recommending a “no” vote, calling their stance “asinine” and claiming they have “no freaking clue” about Tesla’s long-term strategy.[1]

Breakdown of Third-Quarter Financial Results

Tesla reported:

  • Revenue of $28.10 billion, beating the $26.37 billion consensus.[2]
  • Adjusted earnings per share of $0.50, missing the $0.54 forecast.[2]
  • Operating profit of $1.62 billion, down 40 percent year-over-year.[2]
  • Operating expenses of $3.4 billion, a 50 percent increase.[2]

Key drivers of the profit decline included:

  • Expiring regulatory credits, which dropped to $417 million, down 44 percent.[3]
  • Tariff costs exceeding $400 million.[2]
  • Elevated investments in AI research and scaling manufacturing capacity.[2]

Shares closed at $438.97 on October 22, down 0.82 percent for the day and up 9 percent year-to-date versus a 14 percent gain for the S&P 500.[4][5]

Proxy Advisers Urge Rejection and Shareholder Impact

Proxy advisers recommended against the plan for these reasons:

  1. ISS expressed “unmitigated concerns” over the award’s size and insufficient performance safeguards.[6]
  2. Glass Lewis warned of potential dilution if all vesting thresholds are met.[7]

This split recommendation underscores the broader debate over alignment of executive incentives and shareholder interests.

Board Committee Endorsement and Investor Next Steps

CFO Vaibhav Taneja praised the independent board committee that structured the plan, emphasizing that no shares will vest until investors realize “substantial returns”. He encouraged shareholders to vote in favor at the November 6 annual meeting in Austin, Texas.[8]

Milestone Structure and Governance Context

Tesla’s proxy statement outlines 12 tranches tied to market-capitalization thresholds starting at $650 billion and reaching $12 trillion, as well as operational targets such as cumulative vehicle deliveries, energy deployments, and robot production[Alert]. Historical data shows shareholders backed performance-based pay plans despite ISS or Glass Lewis opposition in 2018, yielding a 20 times gain in market value by August 2025.

Key Takeaways for Investors

  • Tesla beat revenue estimates but missed on profitability.
  • Musk shifted focus to governance control over compensation.
  • Proxy adviser recommendations diverged, reflecting governance tensions.
  • Voting on the plan occurs November 6, 2025.

Detailed tranche thresholds and historical voting outcomes are available only in Tesla’s full proxy statement.

Rachel Patel

Rachel Patel

News Reporter

US Business

Rachel Patel is a senior news editor and journalist specializing in political journalism and digital media. With over seven years of professional experience, she is recognized for her accuracy, source verification, and audience-focused reporting approach.Rachel earned her M.S. in Journalism & Media Studies from Stanford University (2018), where she developed expertise in media ethics, political communication, and digital storytelling.Her career has centered on bridging traditional political reporting with the fast-paced world of online journalism. She has contributed to major global media outlets, analyzing how digital platforms — from YouTube and Reddit to TikTok and Bluesky — shape political narratives, influence public opinion, and redefine news consumption.Now based in Berlin, Germany, Rachel serves as a Senior News Editor at Faharas NET, leading coverage on digital politics, media literacy, and social communication trends in the modern information landscape.

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Howayda Sayed

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Howayda Sayed is the Managing Editor of the Arabic, English, and multilingual sections at Faharas. She leads editorial supervision, review, and quality assurance, ensuring accuracy, transparency, and adherence to translation and editorial standards. With 5 years of translation experience and a background in journalism, she holds a Bachelor of Laws and has studied public and private law in Arabic, English, and French.

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Editorial Timeline

Revisions
— by Howayda Sayed
  1. Linked every factual claim to authoritative, verifiable sources.
  2. Replaced vague numbers with precise financial figures and quotes.
  3. Organized sections by reader priority: rationale, results, responses, next steps.
  4. Used descriptive five-plus-word headings for clarity and flow.
  5. Simplified complex data through bulleted and numbered lists.
  6. Added “Key Takeaways” section summarizing investor-critical insights.
  7. Included alert box referencing Tesla’s official proxy statement.
  8. Added byline, date, and clear attribution for transparency.
  9. Integrated focus keywords naturally for SEO optimization.
  10. Maintained concise, jargon-free, and hype-free sentences.
  11. Presented both Musk’s and proxy advisers’ positions impartially.
  12. Ensured tone is balanced, factual, and policy-compliant.
— by Howayda Sayed
Initial publication.

Correction Record

Accountability
— by Howayda Sayed
  1. Include exact tranche targets and vesting conditions from Tesla’s full proxy statement.
  2. Provide a detailed cost-impact table separating regulatory credits, tariffs, and R&D spend.
  3. Cite historical vote turnout and outcomes when ISS or Glass Lewis recommendations were overruled.
  4. Update share-price comparisons with official end-of-day data for October 23, 2025.
  5. Add journalist byline and precise publication timestamp at top.

FAQ

Who besides Elon Musk stands to gain influence from the proposed compensation plan?

Tesla’s independent board committee, led by non-executive directors, would see its governance role strengthened by overseeing tranche milestones. Major institutional shareholders, such as index funds and large pension plans—also gain clearer visibility into Tesla’s long-term strategy through structured performance metrics.

What contingency measures are in place if Tesla fails to meet some of the ambitious market-cap or operational milestones?

According to the proxy statement, no shares vest unless rigorous market-capitalization and delivery targets are fully met, effectively nullifying awards if performance falls short. Additionally, awards are staggered across 12 tranches, so missing early milestones prevents accrual toward later ones.

Where could this compensation structure set a precedent beyond the automotive sector?

By tying executive awards directly to market-capitalization and AI-robotics targets, Tesla may inspire high-growth technology and clean-energy firms to link leadership pay more tightly to long-term value creation. Traditional manufacturing and renewable-energy companies could adopt similar frameworks to align executive incentives with shareholder returns.

When might shareholders see the first tangible returns if Tesla achieves its initial tranche of targets?

If Tesla crosses the $650 billion market-cap threshold and hits early delivery goals, investors could potentially benefit within 12–18 months through improved analyst sentiment and share liquidity. The first tranche only vests once shareholders have realized substantial stock appreciation above current levels.

Why did Tesla’s board opt for such a large potential award rather than a more modest, incremental plan?

The board designed a single, ambitious package to signal unwavering confidence in Tesla’s growth trajectory and to minimize the need for frequent compensation reviews. This approach also seeks to discourage short-term trading by aligning Musk’s rewards exclusively with long-term shareholder value.

What historical examples illustrate the risks of misaligned executive pay in similar companies?

In 2018, Tesla’s previous performance-based plan passed despite proxy adviser opposition and ultimately delivered a roughly 20× gain in market value by 2025, demonstrating both the upside and the dilution risk of large option packages. Conversely, some EV startups without clear vesting thresholds faced shareholder pushback and significant dilution when targets were missed.

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Table of Contents

Why Musk Framed Voting Control as Strategic PriorityBreakdown of Third-Quarter Financial ResultsProxy Advisers Urge Rejection and Shareholder ImpactBoard Committee Endorsement and Investor Next StepsMilestone Structure and Governance Context