Elon Musk’s $2.6bn pay package rejected by US pension giant ahead of crunch shareholder vote

One of US’ biggest pension funds will vote against Tesla chief exec Elon Musk’s $2.6bn pay package, as shareholders prepare for a crunch vote later today.

The Californian State Teachers Retirement System (CalSTRS) said Musk’s 12-tranche stock award was “just too great” in diluting other shareholders.

Tesla is due to hold its AGM later today. The company needs a majority of voters to support proposals in order for them to be passed.

Proxy firm Institutional Shareholder Services (ISS) has already called Musk’s proposed remuneration “excessive”. Rival Glass Lewis called it “substantial”.

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CalSTRS director of corporate governance Anne Sheehan said: “Given the size of the award, we believe the potential dilution to shareholders is just too great. In addition, we have concerns about the lack of focus on profitability for the company and the one profitability metric that is used excludes the cost of stock-based compensation.”

However, some of Tesla’s other institutional backers have come out in support of Musk. Fund giant T Rowe Price said the pay was “aligned with shareholders’ long-term interests”.

The share award will be Musk’s only remuneration with respect to Tesla. Stock options will vest in multiple stages over a 10-year period.

The first tranche is triggered when Tesla’s stock market valuation hits $100bn, with subsequent slices of shares contingent on further $50bn increases. Tesla is currently valued at just over $50bn.

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