A group of Tesla shareholders is urging fellow investors to reject a proposed $1 trillion pay package for CEO Elon Musk, citing the company’s “erratic performance” and a failure by the company board to provide meaningful real-time oversight of management.

Tesla’s board proposed the largest corporate pay package in history last month and said Mr. Musk’s compensation would be tied to bold benchmarks that the company would have to achieve. Shareholders will vote on the proposal next month.

“The Board’s relentless pursuit of retaining its CEO seems to have harmed the Company’s reputation, led to extraordinarily high levels of executive compensation, and delayed progress on meeting key goals like full self-driving,” a letter from SOC Investment Group and other shareholders states.

The letter additionally calls on shareholders to oppose the re-election of directors Ira Ehrenpreis, Joe Gebbia, and Kathleen Wilson-Thompson. The signatories include officials from several states whose pensions or other funds hold Tesla shares.

“These pay packages provide so much discretion to Tesla’s Board that shareholders cannot be confident of impartial treatment,” the letter states, adding that there is an urgent need to address the issues to preserve long-term value for Tesla shareholders.

The letter complains that prior to Mr. Musk’s purchase of 96 million Tesla shares on September 12, Tesla’s share price was 27 percent below its 2024 peak.

The dissident shareholders blame sales declines and flatlining revenue on Mr. Musk’s political activities, which they say have distracted him and alienated customers. The letter was prepared ahead of sales data released this week in which Tesla reported delivery of a record 497,000 vehicles in the three months ended September 30.

“For such an unprecedented payday, we would have hoped to see performance targets genuinely unprecedented in their rigor,” the letter states.

“Unfortunately, we are again disappointed by the Board’s performance, as they have in fact adopted performance targets that are in many cases vague, undemanding, and subject to significant discretion by what we believe is a non-independent Board.”

The comptroller for New York City, Thomas DiNapoli, was among those who signed the letter. He is a longtime critic of the Tesla board and he posted a statement on X saying the $1 trillion pay package is “excessive, waters down the holdings of other shareholders, and gives a captive board unwarranted discretion.”

Tesla responded to the post, stating, “If @elonmusk doesn’t deliver results, he receives nothing.” The company’s response went on to say that Tesla has achieved an annualized return for shareholders of 49 percent since 2018.

“Hard to argue Elon’s leadership & the Tesla Board’s governance haven’t been effective,” the company stated.

A 2018 equity-based pay package for Mr. Musk is still being litigated in Delaware, where a court rescinded the equity grant after a shareholder lawsuit. That pay package had received shareholder approval but a judge found that Tesla had not fully informed shareholders about the terms of the equity grant.

The Delaware supreme court is scheduled to hear arguments in that case on October 29, according to a court calendar.

The state’s general assembly has amended a law to avoid a similar court battle in the future but the law does not apply retroactively, so Mr. Musk’s case is not affected, the City Journal reported.

The new pay package does not require Mr. Musk to dedicate a specific amount of his time to Tesla. Mr. Musk divides his time among several companies, including his artificial intelligence company, xAI, which merged with his social network company, X, earlier this year. He also runs rocket company SpaceX and health company Neuralink.