• Institutional Shareholder Services recommends voting against Musk's compensation plan.
• The proposed package could lead to extraordinary payouts for partial achievements.
• Musk’s voting power could facilitate the approval of his pay package.
• Concerns raised about the plan's structure and its ability to retain Musk.
• Tesla's board responds to ISS, urging support for the compensation plan.

Tesla's proposed $1 trillion pay package for CEO Elon Musk has come under renewed scrutiny, with proxy adviser Institutional Shareholder Services (ISS) urging investors to vote against what could be the largest compensation plan in corporate history. This is the second consecutive year that ISS has recommended this course of action, as the plan's size and structure have raised substantial concerns among shareholders, particularly ahead of the upcoming meeting on November 6, 2025, according to Reuters and Al Jazeera.

The ISS highlighted that Musk's compensation plan includes design features that could allow for vast payouts even with only partial achievement of goals. The urgency of these recommendations comes after a Delaware court voided Musk's previous $56 billion pay package, raising questions about the sustainability and rationale of subsequent remuneration proposals, as reported by India Times and Reuters.

Despite these controversies, Tesla's shares reportedly rose upon the announcement of Musk's pay proposal, reflecting investor optimism that such incentives could align Musk's focus with the company's long-term strategies. Director Kathleen Wilson-Thompson noted, "Many people come to Tesla to specifically work with Elon, so we recognize that retaining and incentivizing him will, in the long run, help us retain and recruit better talent," highlighting the board's commitment to retaining Musk’s leadership, as stated by Al Jazeera and India Times.

Additionally, Musk’s heightened voting power—approximately 13.5% of Tesla’s shares—could potentially secure the approval of the proposed pay package, despite ISS's alarming estimates about its scale, which include a stock-based award valued significantly higher than Tesla’s own projections. The ISS contended that there were no explicit requirements ensuring Musk's dedication to Tesla over his other ventures, casting doubt on the effectiveness of the proposal to keep him focused on the company, according to Reuters and Al Jazeera.