California pension fund opposes ‘ridiculous’ Elon Musk pay package at Tesla

The head of a massive California pension fund told CNBC on Monday that he is voting against the revised pay package for Tesla CEO Elon Musk.

The vote this week is to effectively reinstate a 2018 pay package that was struck down by a judge in January. California State Teachers’ Retirement System chief investment officer Chris Ailman said that the fund opposed the pay package previously and will do so again.

“We’ll pay him 140-times the average worker pay. How about that deal? I think that’s more than fair. This pay package is ridiculous,” Ailman said on “Squawk on the Street.”

CalSTRS held just under 4.7 million shares of Tesla as of June 30, 2023, according to its website. Calstrs has owned a stake in Tesla since before it went public, Ailman said. Tesla was then headquartered in California but moved to Texas in late 2021.

Musk’s pay package consists of performance-based stock options worth roughly $50 billion. CalSTRS is not the only major shareholder opposed to the proposal. Norway’s sovereign wealth fund has also come out in opposition.

Ailman said that the fund doesn’t plan to sell its Tesla shares but that he does think the valuation for the stock is too high.

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

In addition to Tesla, Musk also helms social media company X and rocket company SpaceX, among others. The billionaire has indicated that he might focus more on his other projects if the Tesla pay package is rejected.

Ailman said he doesn’t want to see Musk completely walk away from Tesla, but added that Musk should let some professional managers handle more day-to-day operations at the electric car company.

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

As of April, CalSTRS managed more some $333 billion in assets.