Can shareholders influence Elon Musk's trillion dollar pay package?

Summary

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Podcast Summary

Podcast: The Indicator from Planet Money
Episode: Can shareholders influence Elon Musk's trillion dollar pay package?
Date: September 10, 2025
Hosts: Adrian Ma & Wayland Wong

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Overview

This episode explores the proposed—and unprecedented—trillion-dollar pay package for Tesla CEO Elon Musk, examining whether and how shareholders can influence such major corporate decisions. The hosts dig into the mechanisms of shareholder power, the real impact of activist investors, and the realities facing even large institutional stakeholders. The conversation alternates between economic analysis and an on-the-ground case study, highlighting Oregon State Treasurer Elizabeth Steiner’s efforts to push for changes at Tesla.

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Key Discussion Points & Insights

1. Elon Musk’s Historic Pay Proposal

• [00:14] Wayland Wong reacts to Tesla’s new CEO compensation package for Musk, ranging from $88 billion up to a trillion dollars if performance goals are hit.
  • "Tesla has proposed a new pay package for CEO Elon Musk that would award him anywhere from 88 billion to about a trillion dollars if he [meets] certain goals."
  • The proposal requires approval at Tesla's November shareholder meeting.

2. Shareholder Voting: Corporate Democracy or Illusion?

• [00:44] The hosts challenge the notion that a shareholder vote is true corporate democracy.
  • "A shareholder vote might sound like a great exercise in, you know, corporate democracy…But it's not that simple." – Wayland Wong

3. Activist Shareholders: Elizabeth Steiner’s Campaign

• [02:19-03:30] Interview with Elizabeth Steiner, Oregon State Treasurer ([02:28]):
  • She sent a strongly worded letter to Tesla's board, critiquing Musk's oversight and pushing for board accountability.
  • Steiner manages $140B in assets; Oregon's pension fund holds ~1% in Tesla.
  • Teamed up with like-minded institutional investors, representing 8 million Tesla shares.

"Tesla value continues to plummet, and there are very good reasons, and one of them is the lack of an effective board who holds Mr. Musk accountable." – Elizabeth Steiner [02:28]

• The coalition’s requests included adding an independent director and limiting board member commitments elsewhere.
• Notable: They received no response from Tesla’s board.

4. The Limits of Shareholder Power

• [03:50-04:45] Analysis with Prof. Brian Cheffins, University of Cambridge:
  • Shareholders' actual ability to influence is "misleadingly" described in terms of ownership.

"It's misleading to think about shareholders as actual owners of companies…to call them owners is, as a form of shorthand, …potentially misleading." – Brian Cheffins [04:10]

• Even large holders, like Oregon’s coalition, only own a sliver (less than 0.3%) of Tesla.

The “Big Three”

• [04:45-05:21] The largest true influencers are BlackRock, Vanguard, and State Street—collectively controlling up to 25% of shares in major public companies.
  • The “big three” usually remain passive investors, rarely engaging in active governance or activism.
• Active vs. Passive Investors Metaphor:
  • "You can think of investors like Elizabeth as helicopter parents...The Big Three...are more like those free range parents who Let their kids go to the playground by themselves." – Wayland Wong [05:21]

"Their powerful default setting is not to be active. And this is quite rational." – Brian Cheffins [05:38]

• BlackRock, cited as an example, oversees governance with a very small staff.

5. Shareholder Proposals: A Shrinking Avenue

• [06:07-07:08] Shareholders can submit proposals to be voted on at annual meetings (e.g., around environmental, social governance).
  • Management generally dislikes these; big investors rarely support them.
  • Recent SEC rule changes (under the Trump administration) make submitting proposals harder.

"You have commissioners in place now that are more sympathetic to the idea that they want to make it more difficult...for shareholders to bring these forward, because that will reduce the inconvenience that the executives of these publicly traded companies face." – Brian Cheffins [07:36]

• Example: Vanguard didn't support any environmental or social proposals last year.

6. Rationale Behind Shareholder Concerns

• [07:56-08:45] Elizabeth Steiner frames her push not as political, but financial—Oregon's assets depend on Tesla stock's performance.

"That lack of consumer confidence in the firm is reflected in the share price, and that affects our ability to earn money from owning Tesla stock, right? This is a rational thing for us to be concerned about." – Elizabeth Steiner [08:15]

7. Examining Musk’s Pay Deal: Performance and Pay Disconnected

• [08:45-09:16] Steiner’s analysis finds Musk could earn enormous compensation for "sub average performance," with only a fraction of his time devoted to Tesla.

"Musk would receive the highest compensation package of any CEO in history for sub average performance at a company that he's only dedicating a fraction of his time to, given his other business interests." – Elizabeth Steiner [08:59]

• Steiner intends to vote "No" on Musk’s package at the upcoming shareholder meeting:
  • "When Tesla holds its annual shareholder meeting in November, Elizabeth says she'll be voting no on this proposal." – Adrian Ma [09:16]

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Notable Quotes & Memorable Moments

• “It’s misleading to think about shareholders as actual owners of companies.” – Prof. Brian Cheffins [04:10]
• “Their powerful default setting is not to be active. And this is quite rational." – Prof. Brian Cheffins [05:38]
• “We want it on the record that we tried really hard to get the chair of the board to pay attention to what investors were saying...not just complain because that's unproductive.” – Elizabeth Steiner [03:30]
• “Musk would receive the highest compensation package of any CEO in history for sub average performance at a company that he’s only dedicating a fraction of his time to.” – Elizabeth Steiner [08:59]

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Timestamps for Key Segments

• [00:14] - Introduction of Musk's trillion-dollar pay package
• [02:19] - Start of Elizabeth Steiner’s story
• [03:50] - The challenge of shareholder power
• [04:45] - The dominance (and inaction) of the Big Three institutional investors
• [06:07] - Shareholder proposal process, recent rule changes
• [08:15] - Steiner’s financial rationale for activism
• [08:59] - Dissecting Musk’s pay vs. performance
• [09:16] - Preview of the coming shareholder vote

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Tone, Takeaways & Closing Thoughts

The conversation is brisk, witty, and peppered with analogies (playground parenting), grounding a complex topic in relatable terms. The episode underlines that despite the theoretical power of shareholder democracy, real influence is limited—especially for activist institutional investors versus “free range” asset giants. The upcoming shareholder vote on Musk’s pay serves as a microcosm for this clash of power, priority, and practicality in the modern corporate landscape.

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Transcript

[A]

Npr this is the indicator from Planet Money. I'm Adrian Ma.

[B]

And I'm Wayland Wong. We had some news come out last week about Tesla that made me do a spit take. I'm talking spraying morning coffee all over my laptop screen. Tesla has proposed a new pay package for CEO Elon Musk that would award him anywhere from 88 billion to about a trillion dollars if he certain goals.

[A]

This would be unprecedented compensation for a CEO. It's not a done deal, though. Tesla shareholders have to vote on this proposal in November, and that's when the company holds its annual meeting.

[B]

A shareholder vote might sound like a great exercise in, you know, corporate democracy, a chance for a Tesla investor to have their say. But it's not that simple.

[A]

Today on the show, we look at what it takes for a shareholder to get their voice heard and the shifting power dynamics between shareholders and corporate leaders. Plus, we talk to one Tesla investor agitating for changes at the company.

[C]

This message comes from Capital One. With the Capital One Saver card, earn unlimited 3% cash back on dining and entertainment. Capital One what's in your wallet? Terms apply [e-mail] support for NPR and the following message come from Edward Jones. Welcome to what does it mean to live a rich life? Maybe it's full of brave first leaps, tearful goodbyes, and everything in between. And with over 100 years of experience, your Edward Jones financial advisor can help. Edward Jones Member SIPC Support for this.

[D]

Podcast and the following message come from Fisher Investments SVP Judy Abrams shares the experience she hopes to create when meeting a prospective client for the first time.

[E]

One of the ways that I work to establish trust is to listen. We're going to be asking you questions to make sure we truly can understand what's going on with you. Then we can make decisions not only for the present moment, but also for whatever direction you're going into.

[D]

Learn [e-mail] Investing in securities involves the risk of loss.

[B]

Earlier this year, Elizabeth Steiner composed a strongly worded letter to the chair of Tesla's board of directors. Let's just say she had some notes.

[F]

Tesla value continues to plummet, and there are very good reasons, and one of them is the lack of an effective board who holds Mr. Musk accountable.

[B]

Elizabeth is the treasurer for the state of Oregon. She oversees $140 billion in assets, mostly the retirement fund for public employees. About 1% of Oregon's investments are in Tesla, and she's been concerned about the company for a while now.

[F]

It's gone from bad to Worse, her.

[A]

Next step was to team up with some other like minded institutional investors. Together they own around 8 million shares in Tesla. And they all signed a group letter about deficiencies they saw in how the board was overseeing Tesla.

[F]

They used the letter that I wrote originally as the basis for the group letter because it was a good letter. I have a good, I have a good team.

[B]

Take the credit. Elizabeth, so humble. I know, right? Anyway, the letter asked for a number of changes, including appointing an independent director to the board and limiting board members commitments at other companies.

[F]

We want it on the record that we tried really hard to get the chair of the board to pay attention to what investors were saying. We proposed solutions, we tried to be part of the solution. Right? And not just complain because that's unproductive.

[A]

This group letter was sent in May and they did not hear back.

[B]

The silence is indicative of how hard it can be to affect real change as a shareholder, even an institutional shareholder, like a pension fund that might hold millions of dollars worth of Tesla shares. Brian Cheffins is a professor of corporate law at the University of Cambridge. He says just because shareholders own stocking companies doesn't mean they have influence.

[G]

It's misleading to think about shareholders as actual owners of companies. They have a crucial bundle of rights in terms of their ability to vote, who's put on the board. But to call them owners is, as a form of shorthand, is too conclusory and potentially misleading about what they're actually about.

[A]

So for example, take Netflix. Even if you were to own 100 shares or even 1 million shares of Netflix, your stake would still be microscopic because there are around 425 million shares of Netflix outstanding.

[B]

Yet remember Elizabeth Steiner and the Group of investors and their 8 million Tesla shares? That sounds like a lot, but it's actually less than a third of 1% of Tesla's outstanding shares. That said, there are investors with meaningful stakes. Brian says there's really just three with this distinction. They are BlackRock, Vanguard and State Street. He says that collectively the Big three will often own a quarter of the shares in a public company.

[A]

So these are the investors that can hold sway with corporate leaders. But Brian says they don't typically stick their noses in what companies are doing. They're not sending letters like Elizabeth Steiner in Oregon.

[B]

You can think of investors like Elizabeth as helicopter parents. You know, they're hovering over their kids at the playground, making sure they're playing nicely with others and not like throwing gravel everywhere. The Big Three institutional investors are more like those free range parents who Let their kids go to the playground by themselves.

[G]

Their powerful default setting is not to be active. And this is quite rational.

[A]

BlackRock, for example, owns shares in thousands of public companies.

[G]

They have about 35 or 40 people who oversee governance. It's impossible under these circumstances for them to study the affairs of each of these publicly traded companies in sufficient detail in order to offer company specific input.

[B]

The free range parents aren't storming their city council meetings to ask for safer playground equipment, but the helicopter parents, like Elizabeth in Oregon. If they want to ask for a change in how a company does something, they do have one tool at their disposal. They can submit proposals that get voted on during annual shareholder meetings.

[G]

The executives of publicly traded companies do not like these. Others might view it as the shareholders having their voice, but they view them as irksome.

[A]

Investors have used these proposals to try and nudge companies on environmental or social issues over the last 10 years. For example, they've asked companies to disclose data on greenhouse gas emissions and gender pay gaps.

[B]

Initially, these investors had some success, but enthusiasm for these kinds of proposals has lately dimmed. One problem is that the investors behind these proposals haven't gotten much buy in from the big three. Vanguard, for example, didn't vote yes on any environmental or social proposals during the most recent season of shareholder meetings.

[A]

So it's like helicopter parents asking the free range parents to sign up as playground monitors. The free range parents aren't interested.

[B]

No, they're just scrolling on their phones. JK JK I have also been that parent. And now the Trump administration might be making it even trickier for investors with concerns to voice them right. Earlier this year, the securities and Exchange Commission issued new guidance that will make it harder for certain kinds of proposals to even make it to a vote.

[G]

You have commissioners in place now that are more sympathetic to the idea that they want to make it more difficult, if I can put it that way, for shareholders to bring these forward, because that will reduce the inconvenience that the executives of these publicly traded companies face.

[C]

Now.

[A]

For Elizabeth Steiner of Oregon, she remains undeterred. And she says her efforts to get changes at Tesla are not about politics. It's about whether the state's investment in Tesla is delivering returns. The company's share price fell sharply in the spring and it's since recovered, but is still down around 8% for the year.

[F]

Whether or not you believe that what Mr. Musk was doing with this Department of Government efficiency was the right thing to do, that led to a lot of people saying, I don't want to buy a Tesla anymore. That lack of consumer confidence in the firm is reflected in the share price, and that affects our ability to earn money from owning Tesla stock, right? This is a rational thing for us to be concerned about.

[B]

As for this new compensation proposal for Elon Musk, Elizabeth ran the numbers. She says that if you look beyond the headline 1 trillion figure, Musk could be rewarded for growing Tesla share price at a rate that's actually below the market average.

[F]

In other words, Musk would receive the highest compensation package of any CEO in history for sub average performance at a company that he's only dedicating a fraction of his time to, given his other business interests.

[A]

When Tesla holds its annual shareholder meeting in November, Elizabeth says she'll be voting no on this proposal.

[B]

This episode was produced by Corey Bridges with engineering by Kwesi Lee. It was fact checked by Cierra Juarez and edited by Paddy Hirsch. Katkin Cannon is our show's editor and the indicator is a production of n.

[C]

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[D]

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