CalSTRS, a significant Tesla shareholder, is raising objections to Elon Musk’s proposed multibillion-dollar compensation package in advance of the company’s upcoming shareholder meeting. Christopher Ailman, the chief investment officer of CalSTRS, has publicly criticized the proposed $46 billion pay package as excessive, advocating for a more equitable salary structure for Musk. He proposed a ratio of 140 times the average worker’s pay as a more reasonable compensation model.
Ailman’s objections stem from concerns regarding the fairness and transparency of the process used to determine Musk’s compensation. This sentiment echoes a previous ruling by a Delaware judge who deemed the final price tag “unfair” and the process “deeply flawed.” Despite acknowledging Musk’s instrumental role in Tesla’s remarkable journey, Ailman emphasized the need for him to delegate operational responsibilities to professional managers, allowing him to focus on his other ventures, particularly space exploration with SpaceX.
While acknowledging Musk’s visionary leadership, Ailman raised concerns about his governance style, describing it as occasionally prone to “temper tantrums.” He argued that Tesla’s valuation should be based primarily on its automotive output rather than speculative factors like AI integration, implying that the company’s stock value should reflect its core business fundamentals.
Despite potential implications for Tesla’s stock value, Ailman underscored CalSTRS’ long-term commitment to the company. He stated unequivocally that the pension fund has no intention of divesting its shares, indicating confidence in Tesla’s future prospects even if Musk continues to pursue his ambitions beyond automotive manufacturing.
The outcome of the shareholder vote, scheduled for Thursday, remains uncertain. Proxy advisors have recommended voting against the proposed pay package, and some institutional investors have already announced their intention to oppose it. These investors have cited concerns over Musk’s decision-making and resource allocation, with particular emphasis on his recent redirecting of a shipment of highly sought-after Nvidia chips to another venture.
Despite the potential for shareholder dissent, Ailman expressed a willingness to support Musk’s visionary goals, including his ambition to colonize Mars. He reiterated the importance of allowing Musk the latitude to pursue his broader ambitions while ensuring that Tesla’s operations remain grounded and focused on delivering value to shareholders.
In summary, while CalSTRS and other institutional investors may voice opposition to Musk’s compensation package, their commitment to Tesla’s long-term success remains steadfast, reflecting a delicate balance between supporting Musk’s vision and advocating for responsible corporate governance.
