Elon Musk Faces Criticism from CalSTRS CIO for Tesla Pay Package

Elon Musk Faces Criticism Over Tesla Pay Package at Viva Technology Conference

At the Viva Technology conference in Paris, Elon Musk encountered criticism from Chris Ailman, the Chief Investment Officer of the California State Teachers' Retirement System (CalSTRS), who voiced opposition to Musk's revised pay package at Tesla. Ailman, whose fund owns nearly 4.7 million Tesla shares, argued that the proposed compensation, which could reach $50 billion through performance-based stock options, is excessive and unjustified. He highlighted the disparity between Musk's potential earnings and the average worker's pay, calling the package "ridiculous." Despite his concerns, Ailman does not intend to sell CalSTRS's Tesla shares, though he believes the stock's valuation is inflated. He suggested that Musk should delegate more responsibilities at Tesla to focus on his other ventures, such as SpaceX or his social media company, X.

Key Takeaways

• CalSTRS CIO Chris Ailman opposes Elon Musk's revised Tesla pay package, calling it "ridiculous."
• Ailman questions Tesla's valuation, stating it's too high at 60-times earnings.
• CalSTRS, with nearly 4.7 million Tesla shares, has been a shareholder since before Tesla's IPO.
• Norway's sovereign wealth fund joins CalSTRS in opposing Musk's $50 billion pay package.
• Ailman suggests Musk should delegate more at Tesla and focus on other ventures like SpaceX.

Analysis

The criticism from CalSTRS's Chris Ailman towards Elon Musk's revised Tesla pay package reflects broader concerns over executive compensation disparities. Ailman's opposition, backed by Norway's sovereign wealth fund, could pressure Tesla to reassess its executive pay structure, potentially influencing other tech firms. Short-term, Tesla's stock may face volatility due to investor concerns, while long-term impacts could include governance reforms and a shift in leadership focus, with Musk possibly delegating more at Tesla to concentrate on other ventures like SpaceX. This could alter Tesla's strategic direction and affect its market valuation.

Did You Know?

• Viva Technology conference: An annual event held in Paris, focusing on innovation and startups, bringing together major corporations, tech leaders, and investors to discuss trends and showcase emerging technologies.
• California State Teachers' Retirement System (CalSTRS): The second-largest public pension fund in the United States, managing retirement benefits for California's public school educators from prekindergarten through community college.
• Sovereign wealth fund: A state-owned investment fund comprised of financial assets such as stocks, bonds, real estate, or other financial instruments. Norway's sovereign wealth fund, for example, is funded by the country's oil revenues and is one of the world's largest investors.