Tesla’s board is set to vote on CEO Elon Musk’s $1 trillion pay package as major proxy adviser firms urge shareholders to reject the deal.

The vote is scheduled for Thursday and will determine whether Musk secures what is the largest compensation package in corporate history.

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Proxy firms Glass Lewis and Institutional Shareholder Services have both recommended that investors vote against the package. These firms often influence large passive funds that hold significant stakes in the electric carmaker.

Tesla has faced mounting challenges this year, with global sales declining and investor confidence wavering.

In July, Tesla reported a 13.5 percent decline in sales in the United States.  They jumped 7.4 percent in the third quarter ending in September compared with the same period the year before, as US consumers scrambled to take advantage of a $7,500 EV tax credit that was set to expire that month.

However, global sales are also on the decline. New car registrations fell by 89 percent in Sweden, 31 percent in Spain, and 59 percent in neighbouring Portugal in October.

Political activity hurt Tesla brand

That tension is compounded by Musk’s political profile. A former ally of US President Donald Trump, he was appointed head of the Department of Government Efficiency, where he advocated for sweeping layoffs across the federal workforce, the largest employer in the US.

Musk’s political activity has hurt Tesla’s brand while boosting its competitors. Between October 2022 and April 2025, sales of other electric and hybrid cars rose by 22 percent, according to a study by the National Bureau of Economic Research. The study estimated that if Musk had stayed out of politics, Tesla’s sales could have been higher by 67 percent to 83 percent — equivalent to roughly 1 million to 1.26 million additional vehicles.

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Despite these headwinds, Tesla board Chair Robyn Denholm has warned that rejecting the pay package could risk Musk’s departure. In a letter to shareholders last week, she said Musk’s leadership “is critical to the brand’s success”.

Analysts agree that Tesla’s future depends on Musk’s continued involvement.

“It’s a watershed moment that we expect Musk to get the pay package by a wide margin. Musk is key to Tesla’s AI ambitions. Musk is Tesla and Tesla is Musk,” Dan Ives, an analyst at Wedbush Securities, told Al Jazeera.

“Musk is a wartime CEO, and no one else will ever fill his shoes at Tesla. [This is the] most important chapter of growth for Tesla ever with the AI Revolution, despite Musk’s political baggage.”

Tesla has doubled down on investments in AI technology. It is building out what it calls its Optimus humanoid robot technology, which the company hopes to launch late next year.

Performance metrics

Musk’s pay package hinges on his performance. It includes 12 ambitious market-cap targets, requiring the company to reach $8.5 trillion in valuation within a decade, starting with $2 trillion. Tesla’s market cap is at $1.48 trillion at the moment,

The performance metrics also include 20 million vehicle deliveries, 1 million AI bot sales, and 1 million driverless robotaxis over that period, with deliveries taking place on all fronts for three consecutive months. Last year, the company sold just less than 2 million vehicles.

Musk earns additional shares as each milestone is met. He must also remain CEO or hold another executive-level role over the course of the 10-year programme.

Critics argue the plan does not incentivise Musk to refocus on Tesla, as he was accused earlier this year of neglecting company responsibilities amid his time spent in Washington, DC.

“Let’s be candid: Elon Musk is already one of the richest people in the world. His existing stake in Tesla, [which is worth] tens of billions of dollars, should normally be incentive enough to drive performance. The idea that another massive equity award will somehow refocus a man who is hopelessly distracted is both illogical and contrary to the evidence,” Democratic New York State Comptroller Thomas DiNapoli, who controls 3.3 million shares through New York State’s pension fund, said in remarks on Monday.

Amid slumping sales and growing political controversy, Musk’s public image has deteriorated rapidly. One factor cited for the dip in sales was Musk’s impact on the brand’s public image.

In February, a Gallup poll found Musk was seen favourably by 43 percent of Americans and unfavourably by 47 percent.

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By August, he was ranked the most unpopular influential figure among Americans, with a favourable rating of 33 percent and an unfavourable rating of 61 percent — trailing only US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu, who has been accused of war crimes.

However, Ives says, the blows to Musk’s image are unlikely to sway investors.

“Investors want Musk as CEO for the next decade, and they view optics as noise,” Ives said.

Tesla did not respond to Al Jazeera’s request for comment.

On Wall Street, Tesla stock is up 4.3 percent to $463.79 as of 2pm in New York. Over the last year, it has risen 84.4 percent.