Tesla stock was jittery in early trade Thursday, with investors bracing for the company’s most consequential shareholder meeting in years.
The stock tanked over 2% to trade at around $452.
The stock closed at $462.07 on Wednesday—marking just the seventh time it has ended above $460—while holding near its all-time closing high of $479.86, set in December 2024.
Over the past three months, Tesla shares have surged 44%, fueled by renewed optimism around its artificial intelligence and robotics ambitions.
At Thursday’s annual meeting in Austin, Texas, shareholders will vote on several proposals that could reshape Tesla’s future.
Chief among them is whether to approve CEO Elon Musk’s $1 trillion compensation package, the largest executive pay plan in corporate history.
The $1 trillion question
Musk’s proposed pay package ties compensation to a series of operational and market milestones.
To receive the full payout, Tesla would need to deliver 20 million vehicles within ten years and deploy one million robotaxis, while its market capitalisation climbs from the current $1.5 trillion to between $2 trillion and $8.5 trillion.
Supporters argue the goals are extraordinarily ambitious and would generate immense shareholder value if achieved.
However, the proposal has met resistance from several major investors, including Norway’s sovereign wealth fund and prominent proxy advisory firms, which have labelled the package excessive.
Tesla’s board has warned that Musk could leave the company if the plan is rejected.
A separate vote will determine whether Musk should receive a replacement package if a Delaware court ultimately strikes down his previous compensation agreement, which remains under legal review.
Proposal to invest in Musk’s AI startup
Shareholders will also weigh a controversial proposal to authorise Tesla to invest in xAI, Musk’s artificial intelligence startup.
Musk has publicly supported the idea, arguing that closer collaboration could accelerate Tesla’s development of AI and autonomous technologies.
The Tesla board, however, has not endorsed the plan. Critics contend it risks deepening conflicts of interest between Musk’s multiple ventures, which already include SpaceX, Neuralink, and The Boring Company.
Investors must decide whether the potential synergies justify the governance risks of intertwining Tesla’s finances with Musk’s broader tech empire.
Corporate governance and political conduct under review
Another proposal seeks to eliminate Tesla’s supermajority voting requirement, replacing it with a simple majority standard.
The company has failed to pass similar resolutions in 2019, 2021, and 2022, each time falling short of the two-thirds approval threshold.
If adopted, the change would make it easier for shareholders to approve future proposals—but could also strengthen Musk’s influence over the company.
Shareholders will also vote on a political neutrality proposal that would restrict the company and its executives from engaging in partisan activity.
The measure would create board-level oversight to ensure Tesla and its leaders remain politically neutral.
The board opposes the proposal, saying its existing policies already ensure accountability and disclosure.
Still, the vote will serve as a referendum on Musk’s outspoken political activity, including his public endorsement of US President Donald Trump, which some analysts believe has alienated certain consumers.
Retail investors may hold the key
One key dynamic distinguishing Tesla from most large-cap companies is its unusually high proportion of retail shareholders.
According to Bloomberg data, individuals own around 40% of Tesla’s publicly traded shares—far higher than the 25% average among other “Magnificent Seven” tech stocks and well above the 5% average for S&P 500 companies.
That retail influence has long served as a stabilising force for Musk, whose personal brand resonates strongly within Tesla’s investor community.
On social media platforms such as X, retail shareholders have consistently expressed support for Musk’s leadership and compensation.
Analysts expect that support to carry through to Thursday’s vote, ensuring that Musk remains firmly at the helm of the company he has transformed into one of the world’s most valuable enterprises.
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