On September 15, 2025, Elon Musk filed a disclosure with the U.S. Securities and Exchange Commission (SEC) indicating that he had acquired approximately 2.57 million shares of Tesla Inc. in open-market transactions on September 12, at a cost of nearly $1 billion. This represented his first meaningful open-market purchase of Tesla stock since 2020. Most of his holdings had come through exercising options granted under earlier compensation arrangements. According to the filing, the purchase prices averaged just under $390 per share. The market responded swiftly: Tesla’s stock surged to an intraday high of $425.70 before closing at $410.04. For a company with a market capitalization of roughly $1.4 trillion, such a reaction, amounting to more than a 5 percent move, was remarkable.
Almost all major news outlets interpreted Musk’s purchase as a signal of renewed confidence in Tesla and, perhaps more importantly, of his willingness to devote more time and energy to the company amid his many competing ventures. That confidence proved contagious: Investors embraced the signal by imputing to the company nearly $70 billion of additional market value on the basis of the CEO’s $1 billion outlay. What the purchase does for Musk himself, however, runs deeper.
First, there was a fortuitous coincidence: September 15, 2025, the date Musk’s purchase was disclosed, was also the record date for Tesla’s annual shareholder meeting scheduled for November 6. In practice, this means that all share acquisitions settling on or before September 15 are eligible to vote at the meeting. Purchases made on Friday, September 12, settled just in time under the new T+1 rule (excluding weekends) to be included on the record date. CEOs are generally predisposed to selling shares in their own companies, as they receive a ton through compensation, both to meet personal consumption needs and to diversify their portfolios. However, our prior research paper[1]discovered that when a contested voting event, such as a proxy contest, is on the horizon, CEOs slow their selling and may even accumulate additional shares to strengthen their voting and control power. In separate research, one of us documented record-date vote-buying by investors when controversial issues are on the meeting agenda.[2] This pattern maps exactly onto Musk’s behavior: He had been a consistent seller of Tesla stock in recent years, including liquidating tens of billions of dollars’ worth to finance ventures such as the acquisition of Twitter (now X), but in 2025 he made no sales, and, on the deadline for the record date, he executed a sizable purchase.
So, what will be voted upon in the November shareholder meeting? At the center of the agenda is the proposed $1 trillion notional-amount compensation package for Elon Musk, a performance-based award of historic scale in corporate America. While the headline figure of $1 trillion has captured public attention, the actual realizable value will depend on whether an array of milestones are met, including market capitalization in multi-trillion-dollar increments, breakthroughs in full self-driving and robotics, and sustained profitability targets. What is clear, however, is that the vote will determine whether Musk receives the proposed package upon delivering the company’s most ambitious aspirations.
At present, Musk beneficially owns 19.7 percent of shares outstanding (the percentage of votable shares could be a bit lower[3]) and other insiders such as his brother and board members hold an additional 0.2 percent.[4] For context, the largest outside shareholders are the usual “Big Three,” Vanguard (6.9 percent), BlackRock (5.7 percent), and State Street (3.5 percent). Put differently, Musk’s voting bloc by itself outweighs that of any single institution by a wide margin and is large enough to neutralize the combined opposition of two, or even three top outside investors.
Tesla’s latest proposal may give some shareholders a sense of déjà vu. In 2018, they were asked to endorse what was then the most generous CEO pay deal in corporate history, an option grant nominally valued at $56 billion. That vote was advisory, a “say-on-pay” resolution that received about 73 percent support from unaffiliated shareholders (i.e., excluding Musk), allowing the board to justify implementing the plan. Yet in 2024, the Delaware Chancery Court voided the arrangement, faulting the board’s process and independence. Perhaps to avoid a repeat, the 2025 proposal has been structured differently on three key ways.
First, the vote is binding (not “advisory”), i.e., approval by a majority of the shares present, and voting at the annual shareholder meeting is required for Musk to receive the award, ensuring that it has more legal force.
Second, unlike in 2018 when Musk’s own shares were excluded, this time his stake will be included in the tally. This is perhaps because the current proposal has not been designated as a related-party transaction but instead as a board-approved employment agreement amendment, such that under the Nasdaq rule, Texas law, and Tesla’s bylaws all outstanding shares are entitled to vote. Musk needs about 40 percent of the outside votes to be cast in his favor. Given that 73 percent of more or less the same external shareholder base supported the 2018 package, achieving this threshold should not pose a significant challenge.
Third, by disclosing the additional ownership, Musk was accidentally or effectively conducting an experiment that calibrates how the market would respond to a deeper personal commitment when concerns have been raised about the distractions faced by an unusually versatile CEO. Against that backdrop, a relatively small increase in his exposure, about 0.6 percent of shares outstanding, or $1 billion, triggered a nearly $70 billion rise in Tesla’s market capitalization. The leverage was striking: For every dollar Musk added, investors received seventy more. The implication is that if a marginal outlay can move the firm’s value so dramatically, then a fully focused CEO, dedicating his time and mind to Tesla’s most ambitious goals, could plausibly generate more in shareholder wealth over the next decade in $1 trillion units. Pope Leo has already expressed deep misgivings about the scale and symbolism of the package,[5] but much to his dismay, institutional investors may well vote it through.
ENDNOTES
[1] Vyacheslav Fos and Wei Jiang, “Out-of-the-Money CEOs: Private Control Premium and Option Exercises,” Review of Financial Studies 29, no. 6 (June 2016): 1549–1585, https://doi.org/10.1093/rfs/hhv068.
[2] Vyacheslav Fos and Clifford G. Holderness, “The Distribution of Voting Rights to
Shareholders” Journal of Financial and Quantitative Analysis, Vol. 58, No. 5, Aug. 2023, pp. 1878–1910, https://doi.org/10.1017/S0022109022000655.
[3] There is not yet public information on how much Musk has exercised the vested option prior to the record date. Our estimate puts his voting power to be around 15.3 percent, assuming Musk did not sell any shares since the most recent disclosure, excluding exercisable options, and including restrictive shares with voting rights.
[4] Based on SCHEDULE 14A form filed with the SEC on September 17, 2025 for holdings as of August 29: https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000110465925090866/tm252289-12_def14a.htm.
[5] See, e.g., https://www.reuters.com/world/pope-leo-criticises-high-musk-style-corporate-pay-packages-2025-09-14/.
This post comes to us from Vyacheslav (Slava) Fos, a professor of finance and Hillenbrand Family Faculty Fellow at Boston College’s Carroll School of Management, and Wei Jiang, Charles Howard Candler Professor of Finance at Emory University’s Goizueta Business School.