The battle over Tesla CEO Elon Musk's colossal pay package is intensifying.

Tesla shareholders will cast their votes next week on Musk's compensation plan, estimated to be worth up to $56 billion. The first one was junked due to loopholes in the approval process. It's up to the Delaware judge if the second vote will be favorable for the automaker.

Musk's Campaign for Approval

Elon Musk is leaving no stone unturned to secure a favorable outcome. He is actively engaging shareholders on his social media platform X, offering private tours of Tesla's Texas factory, and vehemently opposing critics of his compensation. Musk's proposed pay package would make him the highest-paid CEO globally.

"They are oathbreakers," Musk stated on X in response to shareholders planning to vote against his compensation.

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Opposition from Proxy Advisory Firms

According to The Verge, several top proxy advisory firms have recommended shareholders vote against the proposal, labeling it as excessively large and potentially dilutive.

Glass Lewis, a leading proxy firm, highlighted the disproportionate size of the award and its potential impact on shareholder value. Similarly, Institutional Shareholder Services advised against the pay package for similar reasons.

Critical Time for Tesla

The vote on Musk's compensation is seen as a referendum on his leadership during a challenging period for Tesla. The company faces declining sales of its electric vehicles amid increasing competition from cheaper alternatives.

Tesla's vehicle lineup is aging, and the future of a more affordable mass-market EV remains uncertain. Additionally, Tesla's stock price has dropped nearly 30 percent since the start of the year, and the company has laid off tens of thousands of employees, including most of the Tesla Supercharger team.

Musk Envisions to Have Smooth Control Over Tesla

Amid these challenges, Musk is pushing for greater control over Tesla, arguing that he needs at least a 25 percent ownership stake to drive the company toward a future dominated by artificial intelligence and robotics.

Currently, Musk holds about 13 percent of Tesla after selling shares to acquire Twitter (now X). He has even threatened to spin off Tesla's AI work into a separate company if his demands are not met.

What Happened Previously?

Tesla shareholders initially approved Musk's compensation plan in 2018, granting him an additional 12 percent stake in the company over several years, contingent upon meeting specific benchmarks. These included a market valuation of $650 billion, which was more than ten times Tesla's 2018 value of $59 billion. The company surpassed these benchmarks, allowing Musk to collect the $56 billion pay package by 2022.

However, a shareholder lawsuit filed in 2018 argued that the board lacked independence from Musk, who had personal connections with several board members.

In January, Delaware Chancery Court Judge Kathaleen McCormick voided Musk's compensation, ruling that shareholders were not properly informed about the proposal's origins. Tesla is now asking shareholders to re-ratify the proposal, along with other corporate governance changes.

Influencing Retail Investors

Despite the controversy, Musk's influence over Tesla's retail investors remains strong. About 44 percent of Tesla's stock is held by retail investors, the highest percentage among the top 10 companies in the S&P 500, per Reuters.

The EV maker is actively rallying support through its website votetesla.com, emphasizing the past and future value creation at stake.

Preliminary Voting Results

Preliminary data suggests that Musk's campaign might be paying off. A report by trading platform eToro revealed that about 25 percent of Tesla's shares have already voted, with more than 80 percent in favor of Musk's package.

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