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

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.

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]

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]

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

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.