Tesla founder Elon Musk made his move from California to Texas a very public matter in 2020, calling a newly signed law forbidding schools from notifying parents about a child’s gender transition “the last straw.” Five years after moving his social media company X and starship business SpaceX to Texas, California’s Public Employees’ Retirement System, or CalPERS, is joining a push that could keep Musk from receiving a proposed compensation package with his EV company Tesla worth $1 trillion.
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If opposition succeeds in blocking the package, Tesla warned it could result in Musk’s departure.
CalPERS, the nation’s largest public pension fund and owner of around 5 million shares of Tesla, announced Thursday that it would vote against an “aggressive” benefits package for Musk that could hit the trillion-dollar mark if he meets certain benchmarks. Shareholders and their proxies will meet in Texas on Nov. 5, with a scheduled vote on Nov. 6.
“The CEO pay package proposed by Tesla is larger than pay packages for CEOs in comparable companies by many orders of magnitude. It would also further concentrate power in a single shareholder,” a CalPERS spokesperson told Bloomberg.
The deal
To reach the 13-digit payday, Musk would have to grow the automaker’s total market cap from its current valuation of $1.1 trillion to $8.5 trillion, with several benchmarks over a decade. It includes 20 million Tesla vehicles delivered with 10 million full self-driving subscriptions, one million Bots (Tesla’s Optimus) sold and one million robotaxis in commercial operation.
Should he pull off the significant growth goal, Musk would hold 12% of the company’s shares.
Not the first time
The announcement that CalPERS would oppose Musk’s pay deal mirrors a situation that has him battling the Delaware court system.
The pension fund opposed Musk’s pay package in 2018. A Chancery Court judge sided against Musk, calling the “unfathomable” compensation package excessive. The company proposed the same deal in 2024, only for the judge to deliver the same ruling. That case reached the state’s Supreme Court on Oct. 15.
Tesla without Musk
Tesla chair Robyn Denholm said in a public letter to shareholders on Monday that next month’s vote on Musk’s compensation package would decide whether the company is able to keep the mercurial entrepreneur.
“The fundamental question for shareholders at this year’s Annual Meeting is simple,” Tesla wrote. “Do you want to retain Elon as Tesla’s CEO and motivate him to drive Tesla to become the leading provider of autonomous solutions and the most valuable company in the world?”
