Tesla investors are wrapping up voting on CEO Elon Musk’s controversial new long-term compensation package, reportedly worth over $1 trillion, ahead of their annual shareholder meeting on the afternoon of November 6. The package has been presented to shareholders as performance-based and is modeled after Musk’s 2018 incentive plan, linking payouts to specific market capitalization and operational milestones. If approved, Musk’s voting control would increase from 15.8% to over 25% upon achieving the stated milestones, according to public filings.

The enormous proposed compensation package has received widespread criticism from corporate governance experts and prominent institutional investors. However, prediction markets—platforms that leverage the “wisdom of the crowd” to predict future events—suggest it is highly likely to pass. Prediction market forecasts have recently been shown to be more accurate in many instances than polls or traditional experts. Apparently, the wisdom of the crowd is that Musk is worth the money. 

“This time around, the board’s approach to Musk’s new going-forward pay package had great transparency with respect to shareholder disclosure, and the new pay measure is more likely to survive judicial scrutiny in Texas.”  - Francis G. X. Pileggi

An existential question is in play here: Can Tesla thrive without Musk? If approved, Musk’s grip on Tesla would be solidified. However, if rejected, the implications could be seismic. During the company’s Q3 investor call, Musk suggested that he could potentially scale back his involvement or even depart, quipping, “[l]et’s just say I’m not going to build a robot army if I can be easily kicked out by activist investors.”

So far, Musk has received support from several prominent institutional investors. The State Board Administration of Florida (SBA) filed a memo with the SEC reaffirming its support for approval, emphasizing Tesla’s positive long-term stock performance. Cathie Wood’s Ark Invest, Baron Capital, and Charles Schwab & Co. also confirmed their support, praising Musk’s vision for the company. Notably, retail shareholders—who hold roughly 45% of Tesla stock—are expected to overwhelmingly approve the proposal. This 45% “block” held by Tesla’s retail investors is significant, given that the board asserts the measure only requires a simple majority of votes to pass. As a prior point of reference, Musk’s $56 billion pay package from 2018 (now tied up in Delaware Court) passed with about 72% of the vote (excluding Elon and Kimball’s shares).

While some major institutions have endorsed the package, others remain sharply opposed. Glass Lewis and Institutional Shareholder Services (ISS), two influential proxy advisory firms, have recommended that shareholders vote against the pay plan. These firms cite governance, pay scale, and dilution as their key concerns. Further, Norway’s Sovereign Wealth Fund (Norges Bank Investment Management), Tesla’s sixth-largest institutional investor, released the following statement: “While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk.”

Other institutional investors have similar concerns; California Public Employees (CalPERS) and NY State Retirement Fund announced their intention to reject the pay package. Securities attorney Braeden Anderson at Gesmer Updegrove LLP in Boston articulates some of the fear that galvanizes the plan’s opponents: “[c]ritics argue that no single executive should wield this level of influence or reward, and that boards exist precisely to guard against the kind of concentration of power this package represents.”

Despite some very public opposition to the proposed pay package, the two leading prediction markets currently suggest that approval is almost assured. At the time of publication, Polymarket places its approval odds at 97%, and Kalshi places the odds at 92%. Data scientist Alex McCullough’s study shows that Polymarket predicted world events with nearly 90% accuracy when forecasting outcomes within a week of the event.

But even if Musk’s new package is approved on November 6, this is not likely to be the end of the showdown on the subject of his stratospheric incentive package. According to attorney Francis G.X. Pileggi, a Delaware law and corporate governance expert, “We should expect that new shareholder litigation attacking this pay package will be filed almost immediately after the vote, but this time in Texas.” The Tesla board moved the company’s domicile from Delaware to Texas in March of 2025, partly in response to the chilly reception in the Delaware Court of Chancery to Musk’s much-embattled $56 billion prior pay package at Tesla (the prior package was granted back in 2018 and covered a ten-year performance period). Litigation over that 2018 package is now in front of the Delaware Supreme Court. But Pileggi notes, “This time around, the board’s approach to Musk’s new going-forward pay package had great transparency with respect to shareholder disclosure, and the new pay measure is more likely to survive judicial scrutiny in Texas.”

Adam Jones of Morgan Stanley, who called the meeting “one of the most important events in Tesla’s history,” said the stock could tumble more than 10% if the proposal fails to pass. Bank of America’s Federico Merendi expressed a similar sentiment, arguing that failure could cause Musk to shift his focus to his other ventures, likely unsettling investors.

Professionals and academics say we can look to the recent performance of Tesla's stock for indications of consensus about an eventual victory for Musk. According to Professor Robert Anderson of the University of Arkansas Law School, there is a wealth of investor support for the performance-based pay package. “Tesla’s stock price has gone up a third since the pay plan was announced, reflecting the stock market’s overall enthusiasm for the plan. Indeed, on the minds of many institutional investors and most individual investors (some of Musk’s strongest supporters) is not the risk of the pay plan being adopted, but of it possibly failing and Musk quitting as CEO. But in this instance, on the eve of the vote, both the stock market and the prediction markets are in alignment and have “priced in” their high confidence that both the plan will pass and Musk will stay.”

Whatever the outcome, the Tesla vote will serve as a defining case study. According to Gary Chodes, CEO of the National Law Review, “this vote will provide valuable feedback regarding two important corporate governance questions: How large is too large for a single CEO’s compensation? Can corporate boards effectively oversee a visionary founder with supermajority power?” The shareholder meeting will either mark the day investors reaffirmed Musk’s unrivaled influence on Tesla or the moment investors reasserted shareholder constraint.

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