FILE PHOTO: Tesla CEO Musk departs the company’s local office in Washington · Reuters
The California Public Employees’ Retirement System (CalPERS) is taking a stand against Elon Musk’s $56 billion pay package. Marcie Frost, CalPERS’ CEO, stated that the agency plans to oppose the compensation deal, CNBC reported on Wednesday.
“We do not believe that the compensation is commensurate with the performance of the company,” Frost explained in an interview with CNBC.
CalPERS, one of the top 30 investors in Tesla, holds 9.5 million shares according to LSEG data. Despite this significant stake, the U.S. pension fund did not respond to Reuters’ request for comments immediately.
Elon Musk reacted on social media platform X, claiming that CalPERS “broke the deal.” He argued, “What she’s saying makes no sense, as all the contractual milestones were met. CalPERS is breaking their word.”
Shareholders Urged to Reject Pay Package
On Saturday, proxy advisory firm Glass Lewis advised Tesla shareholders to reject the pay package. In a separate filing, Tesla countered that Musk is generating substantial wealth for shareholders and possesses a significant personal investment in the company’s success.
Musk’s compensation plan, the largest in corporate America, includes no salary or cash bonus. Instead, it ties his rewards to Tesla’s market value reaching as high as $650 billion over a decade from 2018.
A Delaware judge had previously rejected the pay package in January, calling the compensation “an unfathomable sum” that was unfair to shareholders.
Last month, Tesla appealed to its shareholders to reaffirm their approval for Musk’s pay package, originally set in 2018.
Egan-Jones Supports Musk’s Pay Plan
In contrast to Glass Lewis, Egan-Jones Proxy Services has recommended investors vote to ratify Musk’s pay package. In an email sent by a company manager on Wednesday, Egan-Jones emphasized the importance of maintaining Musk’s leadership and motivation, which they consider vital for Tesla’s continued growth and innovation.
Egan-Jones also suggested investors back Tesla’s proposal to move its state of incorporation from Delaware to Texas. They argued that this change “aligns legal and operational bases, potentially enhancing operational efficiency and corporate culture.”
The debate over Musk’s compensation highlights the tension between high executive pay and shareholder interests. As one of the largest pension funds in the U.S., CalPERS’ opposition carries significant weight. Whether shareholders will side with CalPERS or support Musk’s ambitious pay package remains to be seen.
(Reporting by Harshita Mary Varghese and Niket Nishant in Bengaluru
Additional reporting by Ross Kerber in Boston
Editing by Matthew Lewis)
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