Tesla shareholders once again backed a massive compensation plan for CEO Elon Musk, reaffirming their faith in his leadership. However, this year’s vote revealed growing divisions among investors compared to the near-unanimous enthusiasm seen in 2018. Despite passing comfortably, the vote underscored increased scrutiny around governance and the long-term risks of tying such a large payout to future performance milestones.

Investor Support Shows Signs of Softening

In 2018, Tesla shareholders overwhelmingly approved Musk’s record-setting compensation plan, valued at around $56 billion at the time, with about 73% voting in favor. That support came amid a period of rapid growth, as Tesla transitioned from a niche automaker into a global electric-vehicle powerhouse.

In 2025, shareholders again backed a package of similar magnitude—potentially worth hundreds of billions of dollars if ambitious targets are met—but sentiment has clearly shifted. While overall approval exceeded 75%, several major institutional investors, including global funds and pension managers, voted against the plan. Their concerns center on the scale of the award, governance safeguards, and whether such incentives remain aligned with shareholder value in a more mature company.

Corporate Governance and Market Perception

The growing dissent among institutional investors reflects a changing climate around executive compensation and corporate oversight. Critics argue that Tesla’s board remains too closely aligned with Musk, raising questions about independence and accountability. The debate is particularly relevant as Tesla faces operational challenges, from slower EV demand growth to increased competition in China and tightening margins across its core products.

Retail shareholders, however, continue to show strong loyalty toward Musk, viewing his leadership as critical to Tesla’s innovation pipeline—spanning autonomous vehicles, energy storage, and robotics. This divide between institutional caution and retail enthusiasm underscores how investor demographics can shape corporate governance outcomes, especially for companies with a charismatic and dominant founder.

What to Watch Going Forward

Tesla’s ability to deliver on the ambitious milestones tied to Musk’s pay package will be closely watched in the coming quarters. Market participants are likely to assess whether the company can reignite growth amid evolving global competition and regulatory uncertainty.

For investors, the key question is whether the pay structure will drive sustainable performance or simply reinforce Musk’s control without improving long-term shareholder returns. The result of this vote may mark a turning point in how markets evaluate the balance between visionary leadership and responsible governance—a debate that will continue to shape Tesla’s trajectory in 2025 and beyond.