If Musk's "trillion-dollar compensation" is rejected, will Tesla immediately drop by more than 10%?
Morgan Stanley believes that if Elon Musk's compensation plan is rejected at the shareholders meeting, Tesla's stock price could immediately experience a sell-off of more than 10%, casting a shadow over the company's strategic future.
According to Windchaser Trading Desk, in a report released by senior analyst Adam Jonas on October 30, 2025, Morgan Stanley issued a risk warning about the upcoming Tesla shareholders meeting on November 6. Although the market widely anticipates Musk's massive compensation plan will be approved, the report lays out the serious consequences of a "failure", offering a quantitative analysis of a major tail risk for investors.
As of press time, Tesla's stock price is $444.71, up more than 15% this year.
No-confidence vote and stock price crash
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 sharp and immediate reaction in capital markets. Morgan Stanley explicitly warns that this seemingly simple vote is actually a high-stakes gamble regarding 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 may see an immediate sell-off (possibly over 10%), and the company's strategic prospects would be overshadowed, making our bear-case stock price forecast possible. 'Key person risk' and succession issues may be brought to the forefront."
Musk's reaction and talent loss
Beyond the direct impact on the stock price, 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 demands for greater control, and the company’s "talent magnet" effect would face severe tests.
"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... (Rejection of the plan) could cause serious recruitment challenges for the company."
According to Wallstreetcn, Tesla's third quarter revenue saw a 12% increase after a previous 12% decline, with automotive revenue hitting a two-year high. In the third quarter earnings call on October 22, CEO Musk spent little time discussing the automotive market, instead shifting the narrative focus entirely to artificial intelligence, autonomous robotaxi, and humanoid robot Optimus, declaring the company is at a "critical inflection point" for bringing AI into the real world.
In Morgan Stanley's view, Tesla's ability to attract and retain top artificial intelligence, manufacturing, and engineering talent depends largely on Musk continuing to serve as the energetic center of the leadership, constantly pushing technological boundaries. The failure of the compensation plan would undoubtedly undermine this fundamental basis.
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The above content comes from Windchaser Trading Desk.
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