CalPERS Rejects Musk’s Proposed $1 Trillion Tesla Pay Package

Post by : Raina Nasser

The California Public Employees' Retirement System (CalPERS), the largest public pension fund in the United States, has announced it will oppose Elon Musk's proposed $1 trillion compensation plan for Tesla, a move that could sway other large investors ahead of the pivotal shareholder meeting in Austin on November 6.

Holding roughly 5 million Tesla shares, CalPERS said the award dwarfs pay norms at comparable firms and raises serious governance questions by further centralising power in a single individual.

The decade-long package ties awards to ambitious performance targets. If every tranche were achieved, Musk could receive additional equity that might lift his stake in the automaker to about 25 percent.

On Tesla's recent earnings call, Musk urged shareholders to back the scheme, arguing it was vital to sustain his drive and continued leadership. Several advisory firms, however, have recommended against the proposal, calling it excessive and misaligned with broader shareholder interests.

This is not an unfamiliar confrontation for CalPERS. The fund opposed a $50 billion payout plan in 2018, which a Delaware court later invalidated earlier this year. Last year CalPERS CEO Marcie Frost publicly criticized a separate $56 billion proposal, highlighting deficiencies in transparency and accountability.

The dispute underscores a larger policy debate over executive pay and board oversight. Opponents warn that such outsized packages set risky precedents, while proponents credit Musk's leadership with helping make Tesla one of the world's most valuable automakers.

With the November 6 vote approaching, Tesla's directors are under pressure to defend the package and persuade shareholders that the rewards align with long-term company objectives.

The result of the vote could influence not only Tesla’s governance and ownership dynamics but also shape U.S. norms and discussions around CEO compensation and corporate responsibility.