Tesla CEO Elon Musk roasts shareholder group that opposes his pay package — but made 11x on their inv...
Musk Slams CalPERS: Hypocrisy Over Pay?
Tesla CEO Elon Musk criticized the California Public Employees’ Retirement System (CalPERS) for opposing his $56 billion pay package, despite the fact that their investment in Tesla stock increased significantly under his leadership. CalPERS, which owned Tesla shares valued at about $40 million in 2018, now holds shares worth approximately $1.7 billion. The controversy arises as Tesla prepares for a shareholder meeting where Musk's compensation will be a key issue, following a Delaware court's rejection of the pay package earlier this year.
Why is CalPERS opposing Elon Musk's pay package despite the significant appreciation in their investment value?
CalPERS is opposing Elon Musk's $56 billion pay package despite the significant appreciation of their Tesla investment for reasons related to the proportionality and appropriateness of the compensation in relation to company performance. Marcie Frost, the CEO of CalPERS, expressed concerns in an interview with CNBC, stating that the compensation does not seem commensurate with the performance of the company2. This indicates that CalPERS believes the pay package is excessive, regardless of the financial gains their investment has seen.
Elon Musk has criticized CalPERS for not supporting his pay package, accusing them of breaking their agreement and lacking honor. This disagreement highlights a fundamental conflict between Musk's expectations and the pension fund's stance on reasonable executive compensation.
Additionally, the backdrop to this controversy includes a legal challenge where a Delaware judge previously invalidated Musk's pay package, calling it "an unfathomable sum" and unfair to shareholders. This legal perspective may influence CalPERS’s decision as it aligns with broader concerns about the size and fairness of the compensation package. Despite the increase in the value of CalPERS's Tesla shares, from $40 million to approximately $500 million, the fund's leadership appears to prioritize corporate governance and compensation standards over the financial performance alone.
What are the details of Elon Musk's $56 billion pay package that is currently under debate among Tesla shareholders?
Elon Musk's $56 billion pay package, initially approved by Tesla shareholders in 2018, is currently a major point of contention12. The package, which is one of the largest in corporate history, is facing scrutiny and opposition despite having been approved previously. This year, a Delaware Chancery Court judge rejected the package, leading to significant discussions about Tesla's future state of incorporation, potentially moving from Delaware to Texas35. The rejection has spurred Tesla to employ various strategies to secure approval for Musk's compensation in a forthcoming vote, including offering factory tours with Musk and other incentives to sway shareholders. The debate is intense, with different investment firms and shareholders holding varied opinions on whether the package should be approved again. The situation underscores the complex dynamics between Musk's leadership, his compensation, and the interests of Tesla shareholders.