Elon Musk's Pay Package Opposed by California Pension Fund at Tesla

• This week's vote aims to restore a 2018 pay package that was invalidated by a judge in January.
• The CalSTRS chief investment officer, Chris Ailman, stated that the fund will again oppose the pay package.
• Ailman stated that the fund has no plans to sell its Tesla shares, but he believes the stock's valuation is overestimated.

On Monday, the head of a large California pension fund announced that he is opposing the updated compensation plan for CEO Elon Musk.

The vote this week aims to restore a 2018 pay package that was invalidated by a judge in January. Chris Ailman, the chief investment officer of the California State Teachers' Retirement System, stated that the fund had previously opposed the pay package and will continue to do so.

"Ailman stated on "Squawk on the Street" that the pay package was ridiculous, as it was 140 times the average worker pay, which he believed was more than fair."

As of June 30, 2023, CalSTRS owned approximately 4.7 million shares of Tesla, according to its website. The pension fund has held a stake in the company since before it went public, and Tesla was initially headquartered in California before moving to Texas in late 2021.

The performance-based stock options worth roughly $50 billion in Musk's pay package are not the only reason for opposition from major shareholders. CalSTRS and Norway's sovereign wealth fund have both come out against the proposal.

Ailman stated that the fund has no plans to sell its Tesla shares, but he believes the stock's valuation is overestimated.

Ailman stated that even if these cars were equipped with AI, they were not worth 60 times their earnings, which was an unreasonable claim.

If the Tesla pay package is rejected, billionaire Musk may focus more on his other projects, including his social media company X and rocket company SpaceX.

Musk should delegate more day-to-day operations at Tesla, according to Ailman, who stated that he doesn't want Musk to completely abandon the company.

Ailman stated that he believes the individual's heart is truly in going to Mars, whether they focus on cars, X, or both.

As of April, CalSTRS managed more some $333 billion in assets.