Tesla Investors Face Big Decisions on Musk’s Control

Tesla TSLA investors will address CEO Elon Musk’s control of the company at its Nov. 6 annual meeting, voting on whether to give Musk greater control, as well as a $1 trillion compensation package.

At Tesla’s recent Q3 earnings call, Musk said: “There needs to be enough voting control to give a strong influence, but not so much that I can’t be fired if I go insane. I think that sort of number is in the mid-20s [in percentage terms].” In addition, CFO Vaibhav Taneja encouraged shareholders to support the three directors up for reelection.

The financial benefits from the proposed pay structure would accrue to Musk all at once in 2035. This depends on whether Tesla achieves several challenging operational and financial milestones, which if met would deliver substantial additional value to Tesla shareholders. These include:

• Increasing Tesla’s market cap to $2 trillion and then on to $8.5 trillion.
• Delivering 20 million vehicles, 10 million active Full Self Driving subscriptions, 1 million robots, and 1 million operational robotaxis.
• Increasing the company’s 12-month adjusted EBITDA to $50 billion on up to $400 billion. (The company reported 12-month adjusted EBITDA of $14.8 billion as of the end of September.)

Crucially, the restricted stock awards in the program would increase Musk’s voting control over the company much earlier than 2035, by about 1% for each of the 12 tranches of shares in the package.

Background to Tesla’s 2025 Annual Meeting

Tesla has a unique approach to scheduling, so the 2025 meeting is taking place 17 months after the 2024 one. On Nov. 6, shareholders will finally get the chance to opine on a range of important issues affecting the governance of the company. This year, 14 proposals will be voted on—six by management and eight shareholder resolutions. The key topics in play are executive pay, director elections, and shareholder rights.

Musk would already have control of his desired 20% of Tesla had he not pledged around one-third of his shareholding “as collateral to secure certain personal indebtedness,” according to Tesla’s proxy statements. For shareholders considering whether to approve the new pay award, this is worth noting.

All this comes after Tesla’s 2018 pay package for Musk was thrown out by a Delaware court last year, prompting the company to redomicile in Texas and ask shareholders to re-ratify the plan.

Shareholder approval rates for executive compensation votes at Tesla are below the US market average, and on a declining trend. So although the three votes on executive pay at this year’s shareholder meeting (Items 2, 3, and 4) are likely to pass, significant shareholder dissent would not be a surprise.

During Tesla’s Q3 earnings call, Musk also made colorfully worded claims that he’s up against asset managers who run index funds blindly delegating their voting duties to proxy voting advisors who “have no frigging clue.” Our own view on the relationship between proxy advisors and asset managers differs.

Tesla Director Elections: Whose Board Is It, Anyway?

A number of investors, including the New York State comptroller, believe Tesla’s board has shown more interest in acting on behalf of the CEO than its independent shareholders.

Average shareholder support for director elections at Tesla has been well below average. Average support for director elections at the company in 12 votes over the last five meetings stands at 81%, compared with a US market average of 94%. That number falls to 73% if we exclude Musk from the average (as shareholders rarely vote to oust a sitting CEO) and adjust to only count votes by shareholders not on the board. Tesla has a classified board in which “classes” of two or three directors at a time are re-elected every three years. This affects the figures somewhat, but it’s still a big gap.

On Item 1 this year, Joe Gebbia is up for election alongside Ira Ehrenpreis and Kathleen Wilson-Thompson, who got the lowest recorded shareholder support of any Tesla directors (49% and 55%, respectively) when they were last elected in 2022. Shareholders voting against Ehrenpreis and Wilson-Thompson that year highlighted their dissatisfaction with the board’s lack of oversight over the pledging of company shares and executive compensation, along with the absence of a response to majority-supported shareholder proposals. With those matters still very much live and with Wilson-Thompson also having served on a two-person committee with chair Robyn Denholm to approve Musk’s latest compensation package, it’s likely that we’ll see further shareholder dissent against director elections on Nov. 6.

Tesla Shareholders Support Governance Measures in Proxy Voting

Tesla’s classified board is one of several issues on which a sizable number of shareholders have chosen to take a stand. While matters of environmental and social sustainability have featured frequently on the company’s proxy ballot, governance proposals have been fewer but generally more successful.

At Tesla’s last five shareholder meetings, a total of 25 shareholder proposals were voted on, of which 19 addressed environmental and social issues and six tackled governance matters. Five of those six governance proposals gained the support of a majority of independent shareholders.

Proposals gaining majority support included those seeking to bolster shareholder rights by ending the classified board structure and electing each director annually, granting proxy access rights which allow a sizable group of shareholders to propose board candidates, and enacting voted decisions by simple majority.

This year, Tesla shareholder resolutions on governance outnumber sustainability resolutions, which reflects wider market trends. Popular proposals requesting annual elections of each director and simple majority voting (Items 12 and 13) have returned to the proxy ballot for the third time in five years. It is likely that these proposals will again be well-supported.

Meanwhile, three proposals address the potential consequences the company’s move to Texas have for shareholder rights. Items 11 and 14 request supermajority shareholder approval before new, more stringent requirements for proposing shareholder resolutions under the Texas Business Organizations Code are applied. Item 10 requests a repeal of the 3% ownership threshold for filing shareholder lawsuits against the company, which was applied upon the redomiciling.

Filers of these resolutions—which include treasurers for the state of Illinois, the state of New York, and New York City—claim the recent governance changes “insulate [Tesla’s] Board and officers from almost all accountability and responsibility for violations of fiduciary duty,” and that “curtailing eligibility to submit a proposal would not serve the best financial interests of the company and Tesla’s shareholders.”

Tesla’s board countered that the 3% ownership threshold for shareholder lawsuits “allows the Company to maintain accountability to our shareholders, while focusing, among other things, corporate resources on claims that matter to a meaningful portion of our shareholder base.”

Regarding shareholder proposals, the board says, “the imposition of a new supermajority voting requirement could be detrimental to shareholders, and conflicts with our proposal to remove all such requirements from our governing documents,” which it has proposed twice previously. The board’s 2022 and 2023 attempts to eliminate supermajority voting requirements were very well-supported by shareholders. Both proposals failed because the supermajority requirement to receive votes representing two-thirds of shares was not met.

With shareholder rights firmly in the spotlight, Tesla’s meeting will provide an early insight into how investors are prioritizing corporate governance issues going into 2026.