There could be trouble ahead for Tesla Inc (NASDAQ:TSLA) as its shareholders meet on Nov. 6 to vote on the new pay package for CEO Elon Musk, with another group encouraging a vote against it.
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Take Down Tesla Movement Targets Musk Pay Package
A group of unions and public interest groups has launched the "Take Back Tesla" movement and website, encouraging Tesla shareholders to vote no on Musk’s pay package.
The group targets union members and public interest groups whose members may own Tesla shares through pensions and retirement plans and are entitled to share their opinions or vote at the shareholder meeting.
A new pay package for Musk that could be worth up to $900 billion is called "outrageous" by the group. The package requires Musk to be at Tesla for 10 years and hit certain milestones to receive the full compensation, which could make him the first trillionaire, with an average annual compensation of close to $100 billion.
The Take Tesla Back movement highlights how Musk's new compensation plan compares to that of Tesla workers on the website.
"The median annual compensation of other employees at Tesla is $57,243; an employee making that amount would need to work for over 1.7 million years to earn what Elon Musk would take home per year under this plan," the website says.
The website also highlights that hitting the goals of the Musk compensation plan would make Tesla worth $8.5 trillion, or around twice the $4.5 trillion market cap of Nvidia Corporation (NASDAQ:NVDA), the world's most valuable company today.
"But the annual value of Musk's trillion-dollar pay package isn't just 2 times what Nvidia's CEO made last year (just under $50 million); it's more than 2,000 times what Nvidia's CEO made last year."
While the movement highlights the potential compensation of Musk compared to the average Tesla worker and Nvidia CEO Jensen Huang, the website also argues for other reasons to vote no on the pay package.
"Elon Musk's political activities have damaged Tesla's brand and distracted him from leadership at Tesla. Yet Tesla's Board of Directors has done nothing to hold him accountable."
The group says that shareholders should act and vote no, telling the pension funds and investment managers to oppose the compensation plan and oppose Board of Directors nominees who won't hold Musk accountable.
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Support Grows Against Pay Package
Take Back Tesla is backed by several groups, including the American Federation of Teachers and the Communication Workers of America.
Together, these two groups represent around 2.5 million workers, as reported by Electrek.
The groups join Institutional Shareholder Services (ISS) and Glass Lewis, the two largest advisory groups, who have publicly said shareholders should vote against the pay package.
Many of the groups speaking out about the pay package have highlighted the need to reduce corporate political power, reduce massive wealth for individuals, and protect shareholders.
Musk and Tesla have spoken out against criticism of his pay package, often highlighting how much Tesla’s value has increased in recent years and how much the company would need to grow in value for his full compensation to be paid.
"Elon receives nothing unless shareholders win big," Tesla tweeted.
The company said ISS "missed fundamental points of investing and governance" and is "disconnected from reality."
Musk has referred to ISS and Glass Lewis as "corporate terrorists."
“ISS and Glass Lewis have no actual ownership themselves and often vote along random political lines unrelated to shareholder interests!” Musk said.
Musk said that if "terrible recommendations" from proxy firms had been followed in the past, it would have been destructive for Tesla.
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