Top proxy advisor Institutional Shareholder Services is recommending that Tesla investors vote against a pay plan for CEO Elon Musk that would grant him nearly $1 trillion more in stock.

The “mega performance equity award” to Musk, designed to retain the CEO long-term, “has an astronomical grant value conditioned upon far-reaching performance targets that, if achieved, would create enormous value for shareholders,” ISS wrote on Friday.

Tesla’s 2025 annual shareholder meeting and proxy vote is scheduled for Nov. 5. The company is scheduled to report third-quarter results on Wednesday.

ISS said that while some shareholders may support the pay plan, “there are unmitigated concerns surrounding the special award’s magnitude and design.”

Musk’s plan, if approved, would be the largest ever awarded to a public company CEO. It could could net Musk up to an additional 12% stake in Tesla, should the company hit a market cap of $8.5 trillion and achieve other goals.

Tesla disagreed with the ISS recommendations.

In a post on X, which is owned by Musk, the automaker accused ISS of missing “fundamental points of investing and governance,” and complained that the advisors had previously “recommended against compensation that shareholders have voted on twice before (and that Elon has already earned), as well as the 2025 CEO Performance Award (where Elon receives nothing unless shareholders win big).”

The company urged shareholders to vote with the board’s recommendations on all proposals on the 2025 proxy.

ISS previously advised investors to reject a “ratification” of Musk’s 2018 CEO pay package, which was worth an estimated $56 billion at the time.

The Delaware Court of Chancery ruled early last year that the 2018 pay plan had been improperly granted by the Tesla board and must be rescinded. The ruling said Tesla hid crucial details from shareholders that they were entitled to before voting, and that Musk had controlled the board.

Musk has appealed that court’s decision to the Delaware State Supreme Court, with opening arguments in the appeal heard by a panel of judges this week.

Representatives for ISS declined to comment beyond the report.

ISS, along with Glass Lewis and smaller peers, can influence how shareholders decide to cast their votes at annual elections. Musk accused ISS and Glass Lewis in 2023 of effectively controlling the stock market because of their influence with passive or index funds in some matters. He also baselessly compared ISS to a terrorist organization.

Musk will be able to vote his own shares in the vote concerning his future pay. He holds at least 13.5% of Tesla’s voting power, according to the most recent available disclosures on his stake. Those holdings alone could be enough to secure approval for the nearly $1 trillion pay package.

In September, Musk added to his ownership of Tesla stock buying another $1 billion worth of shares.

Among other ISS recommendations, the firm also suggested that shareholders should vote against giving Tesla’s board authorization to invest in xAI, the AI company that Musk started in March 2023 but only disclosed publicly in July that year. Tesla has sold tens of millions of dollars worth of its Megapack battery energy storage systems to xAI.

ISS also recommended against voting to reinstate Tesla board member Ira Ehrenpreis, a longstanding and close friend of Musk.

In May, Tesla changed its corporate bylaws to limit shareholders’ ability to sue for a breach of fiduciary duties so that only a shareholder that owns at least 3% of the company’s stock can bring what’s called a “derivative” action. Ehrenpreis presided over Tesla’s governance committee at the time that change was made without a shareholder vote.

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In July, Elon Musk posted photos from inside an xAI data center called Colossus 2, which the artificial intelligence startup aims to turn into a massive supercomputing facility in Memphis, Tennessee.

Musk’s pictures, posted to his X feed, didn’t show off the pricey Nvidia racks that are filled with powerful graphics processing units. Rather, he focused on the wires behind the servers, including one image with thousands of neatly organized purple cables connecting the computers together.

Those purple cables are the signature offering of Credo, a 17-year-old Silicon Valley-based semiconductor company whose name rarely gets mentioned alongside the leaders of the AI boom.

But Wall Street has taken notice.

Credo shares have more than doubled this year to $143.61 after soaring 245% in 2024. The company’s market cap, which was about $1.4 billion at the time of its IPO in 2022, now sits at close to $25 billion. Credo is angling to position itself as a key supplier in the trillion-dollar AI infrastructure expansion, and is benefiting as the money flows downstream.

The stock jumped 5% on Friday after analysts at JPMorgan Chase initiated coverage with the equivalent of a buy rating and a $165 stock price. They said the active electrical cable (AEC) market, which Credo pioneered, is on pace to hit $4 billion by 2028, as all the major hyperscalers invest in data center buildouts.

“The industry outlook is supported by increasing deployments from major companies such as Amazon, Microsoft, and xAI as well as broadening adoption, including Meta and more,” the analysts wrote. They predict annualized revenue growth for Credo of at least 50% through 2028.

Revenue in fiscal 2025, which ended in early May, more than doubled to $436.8 million. The company also turned profitable, recording net income of $52.2 million after losing $28.4 million the prior year. Analysts are expecting sales to more than double again in fiscal 2026 to almost $1 billion, according to LSEG.

Credo’s purple AECs cost between $300 and $500 each, depending on bulk discounts and other negotiations, according to an estimate from the 650 Group, an industry researcher. They are sturdy, moderately thick copper cables wrapped in a braided covering with big connectors containing chips on each side.

Much of the excitement around Credo is driven by the AI boom, which to this point has been driven by a handful of hyperscalers that are rapidly building data centers for future expected workloads. Analysts expect $1 trillion in spending on AI data centers by 2030, but any pullback from the major cloud providers or scaling back in OpenAI’s plans could hurt many suppliers, including Credo.

For now, projections are way up and to the right.

“In the past, Credo’s opportunity was one cable per server, but now Credo’s opportunity is nine cables per server,” said Alan Weckel, an analyst at 650 Group. He estimates that Credo has 88% of the market for AECs, which are also made by Astera Labs and Marvell.

Many GPUs are connected by fiber optic cables powered by components made by companies like Broadcom and Coherent. AECs offer an alternative to fiber optic cables. They have chips called digital signal processors on both sides that use sophisticated algorithms to pull data out of the cable, enabling much longer lengths than traditional copper cables. Credo’s longest AEC is seven meters long.

Credo CEO Bill Brennan, who joined the company in 2013, told CNBC that hyperscalers are choosing his company’s cables because they’re more reliable than fiber optic cables. He said customers are trying to avoid what’s called a “link flap,” where one part of an AI cluster goes offline because the optical cable connecting them fails, costing hours of pricey GPU time.

“It can literally shut down an entire data center,” Brennan said.

He said Credo is increasingly working with hyperscalers in the early stages of planning large AI clusters, especially as some designs become denser, allowing more servers to be connected by shorter cables.

“When you connect with these hyperscalers, the numbers are very large,” Brennan said.

The company doesn’t name its hyperscaler clients, but analysts have cited Amazon and Microsoft as customers. Amazon Web Services CEO Matt Garman posted an image on LinkedIn of the company’s Trainium AI chip racks on Friday that appeared to show Credo’s purple cables.

Credo says it expects three or four customers to make up more than 10% of revenue each in the coming quarters, including two new hyperscale customers this year.

Amazon and Microsoft declined to comment. Meta and xAI didn’t respond to requests for comment.

At a conference for data center professionals in San Jose this week, Credo presented alongside a representative from Oracle Cloud. An example rack of Nvidia GPUs designed by Meta displayed at the show prominently featured Credo’s purple cables.

“Every time you see a new announcement of a gigawatt data center, you can rest assured that we view that as an opportunity,” Brennan told investors on an earnings call in September.

It’s a market that everyone in AI networking is targeting.

Analysts at TD Cowen estimated earlier this month that the market for AI networking chips could be worth $75 billion per year by 2030. Major players include Nvidia and Advanced Micro Devices, which both have their own networking businesses and have the power to dictate which technologies are part of their broader systems.

Brennan’s job, when he joined in 2013, was to commercialize the technology. The company raised its first round of venture funding in 2015 from investors including Walden International, which was run by Lip-Bu Tan, now Intel’s CEO.

The AEC business didn’t take off until the AI boom in the early 2020s, because data centers didn’t yet need its technology, Brennan said.

However, there was early excitement in the air when Musk’s car company came knocking in 2017. Tesla wanted help with its Dojo AI supercomputer and needed chips with more bandwidth than what was available at the time.

Now, Credo is hoping to use its foothold with its active copper cables to branch out into additional product lines, including intra-rack connections, or what’s called “scale-up” networking. The company announced new transceivers and software for optical cables this week.

“You’ve got this market pull like we’ve never had before,” Brennan said. “If you could deliver the next generation right now, it would be consumed. Generation after that, it would be consumed. You’ve got this insatiable demand from the AI cluster world.”

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