Forget the Activists, One Trillion Dollars for Elon and Seven Trillion for Shareholders is a Good Deal
At Tesla’s 2025 Annual Meeting this week, shareholders will decide whether to approve a performance-based compensation plan for Elon Musk. The plan is simple: Musk earns nothing unless Tesla achieves extraordinary results, including increasing its market capitalization from about $1.5 trillion to roughly $8.5 trillion. His maximum payout—approximately $1 trillion—only occurs after shareholders gain around $7 trillion in added value. This is the essence of alignment: Musk’s incentives rise only after investors have already won on an unprecedented scale.
Criticism of the plan comes largely from proxy advisory firms such as ISS and Glass Lewis, as well as union-affiliated and progressive activist groups. The latter often have little or no financial stake in Tesla, and their opposition is driven by governance checklists and political agendas—such as limiting executive pay or imposing ideological conditions such as adding ESG or DEI targets to the compensation plan—rather than maximizing shareholder returns. They are not accountable for the wealth creation shareholders expect, yet their recommendations carry disproportionate influence.
Politicized government-controlled financial entities such as Norway’s sovereign wealth fund and California’s CalPERS pension fund, reliable allies to the ESG and DEI ideology have also come out against the plan. We expect blue state pensions in general to oppose Musk. Whether red state fund will walk the free-market talk in their proxy voting remains, as so often before, unclear.
This creates a serious risk for fiduciaries—both private asset managers and government pension funds—who believe in incentive-based compensation and pro-growth strategies. If these institutions default their proxy voting to advisory firms without scrutiny, they may end up voting against a plan that perfectly aligns with their stated philosophy. Delegating blindly to ISS or Glass Lewis means allowing outsiders with no skin in the game to override the principles of performance-driven value creation.
The choice is clear: approve a plan that ties Musk’s future wealth to Tesla’s success and shareholder prosperity or let politically motivated actors dictate outcomes that undermine long-term growth. Vote with a massive wealth creators like Musk or vote with the chronically underperforming CalPERS or the seriously conflicted Norwegian sovereign wealth fund. If Musk wins, shareholders win first—and win big.