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Tesla shareholder criticizes Elon Musk’s ‘ridiculous’ $56bn pay deal ahead of vote

<span>Elon Musk in Beverly Hills, California, on 6 May.</span><span>Photograph: David Swanson/Reuters</span>
Elon Musk in Beverly Hills, California, on 6 May.Photograph: David Swanson/Reuters

The manager of one of the largest pension funds in the US said it will vote against Elon Musk’s “ridiculous” pay deal as Tesla campaigns for its reinstatement.

Shareholders in the electric carmaker are voting on the $56bn compensation package – the largest ever granted to an executive at a US-listed company – after it was thrown out by a Delaware judge earlier this year.

Related: Tesla leads charge to defend Elon Musk’s $56bn pay package

Ahead of Tesla’s annual shareholders meeting Thursday, Chris Ailman, chief investment officer of the California State Teachers’ Retirement System, known as CalSTRS, told CNBC that he would cast a “no” vote.


“Even if these cars had AI in them, they are not worth 60-times earnings,” Ailman said Monday. “That is absurd.”

The California pension fund has about 4.7m shares of Tesla and manages a total of $333bn in assets.

The shareholder vote is over Musk’s $56bn compensation package that was established by the company’s board, and backed by shareholders, in 2018. CalSTRS voted against the deal then, too.

At the time, the board said Musk would get the payout if Tesla met revenue, profit and share price targets. The company would ultimately meet all targets in 2022.

But back in January, Delaware judge Kathaleen McCormick ruled in favor of a Tesla shareholder who argued that the company’s board inappropriately set the pay package. The judge agreed Musk’s pay package was unnecessary in keeping Musk dedicated to Tesla, an argument that company officers made during the trial.

“Swept up by the rhetoric of ‘all upside’, or perhaps starry-eyed by Musk’s superstar appeal, the board never asked the $55.8bn question: was the plan ever necessary for Tesla to retain Musk and achieve its goals,” McCormick wrote in her decision.

While the shareholder vote is over the compensation package, it’s also largely being seen as a referendum on Musk’s leadership of the company.

Some shareholders have thrown their weight behind Musk. “Without his relentless drive and uncompromising standards, there would be no Tesla,” the billionaire investor Ron Baron said last week.

But others argue that Musk’s sights have turned elsewhere. Musk stirred controversy in 2022 when he purchased Twitter for $44bn and renamed it X. He sold $22.9bn of his Tesla shares to finance the purchase. Musk is also leading SpaceX, which is trying to achieve his goal of getting humans to Mars.

“He needs to focus in on, either on cars, either on X, or on going to Mars,” Ailman said. “And I think his heart really is in going to Mars.”

CalSTRs joins Norway’s $1.7tn sovereign wealth fund, Tesla’s eighth-largest shareholder, in its plan to vote against the pay package.

The Norwegian fund said that, while Musk’s leadership has generated “significant value”, the fund is still “concerned about the total size of the award, the structure given performance triggers, dilution and lack of mitigation of key person risk”.

On Thursday, as Tesla worked to shore up support, Musk retweeted a message from the company urging shareholders to vote in favor of his pay deal. “Please take a moment to vote,” he said.