If Musk's "trillion-dollar compensation" is rejected, Tesla will immediately drop over 10%?
On November 6th, Tesla will hold a shareholder meeting. Morgan Stanley warns that if Musk's compensation plan is not approved, Tesla's stock price may face an immediate sell-off of over 10%, which will be seen by the market as a vote of no confidence in his leadership. A rejection of the plan may also trigger uncertainty about the company's strategic outlook and increase the risk of losing key talent
Morgan Stanley believes that if Musk's compensation plan is rejected at the shareholder meeting, Tesla's stock price could immediately face a sell-off of over 10%, casting a shadow over the company's strategic future.
According to the Wind Trading Desk, in a report released by senior analyst Adam Jonas on October 30, 2025, Morgan Stanley issued a risk warning regarding the upcoming Tesla shareholder meeting on November 6. Although the market generally expects Musk's substantial compensation plan to pass, the report reveals to investors the serious consequences of a "failure," serving as a quantitative analysis of a significant tail risk.
As of the time of publication, Tesla's stock price is $444.71, with an increase of over 15% this year.
Vote of No Confidence and Stock Price Plunge
The core argument of the report is that the failure of the compensation plan would be interpreted by the market as a "vote of no confidence" in Musk's leadership, potentially triggering a severe reaction in the capital markets immediately. Morgan Stanley explicitly warns that this seemingly simple vote is, in fact, a gamble concerning the company's future.
"The failure of the compensation plan may be seen as a 'vote of no confidence' in Elon Musk's leadership of Tesla... The stock price could immediately experience a sell-off (possibly exceeding 10%), and the company's strategic outlook would be shrouded in 'shadow,' making our bearish stock price forecast plausible. 'Key person risk' and succession issues may be brought to the forefront."
Musk's Counteraction and Talent Drain
Beyond the direct impact on stock prices, a deeper crisis lies in Musk's potential reaction and the erosion of the company's core competitiveness. Analysts believe that Musk is likely to reiterate his demand for greater control, and the company's "talent magnet" effect will face severe challenges.
"Investors should anticipate that Mr. Musk will reiterate his reservations about continuing to lead Tesla into the dual-use robotics and general artificial intelligence (AGI) fields without obtaining blocking minority (i.e., 25%) voting rights... (If the plan is rejected) it could pose serious 'challenges' for the company's recruitment."
According to previous reports from Wall Street Insight, Tesla's revenue in the third quarter shifted from a 12% decline in the previous quarter to a 12% increase, marking a new high in automotive revenue in nearly two years. During the third quarter earnings call on October 22, CEO Musk spent almost no time discussing the automotive market, instead shifting the narrative focus entirely to artificial intelligence, autonomous taxis (Robotaxi), and humanoid robots like Optimus, claiming that the company is at a "critical turning point" in bringing AI into the real worldMorgan Stanley believes that Tesla's ability to attract and retain top talent in artificial intelligence, manufacturing, and engineering largely depends on whether Musk can continue to be a vibrant core of the company's leadership, constantly pushing the boundaries of technology. A failure in the compensation plan will undoubtedly shake this fundamental foundation
