Elon Musk Faces $1 Trillion California Cost Despite ‘Texit’ Shift
Elon Musk’s relocation from California to Texas in 2020 was a significant event. His move was prompted by a California law against parental notification regarding children’s gender transitions, which Musk labeled as the “last straw.” Since then, Musk has shifted operations for his companies, including Tesla, SpaceX, and the social media platform X, to Texas.
CalPERS Challenges Musk’s Compensation Package
California’s Public Employees’ Retirement System (CalPERS) has recently raised concerns about Musk’s proposed compensation plan from Tesla. This package has an estimated value of $1 trillion, contingent on Musk achieving various performance metrics.
- CalPERS holds around 5 million shares in Tesla.
- The proposed compensation package far exceeds those of comparable companies.
- Shareholders will vote on the package on November 6, 2024.
If shareholders oppose this package, it may lead to Musk’s departure from the company, according to Tesla. CalPERS has indicated it will vote against the deal during the annual meeting scheduled in Texas.
Musk’s Growth Targets
To qualify for the substantial pay, Musk must significantly increase Tesla’s market capitalization. The company is currently valued at approximately $1.1 trillion, but Musk must elevate this to about $8.5 trillion over the next decade.
- Deliver 20 million vehicles.
- Achieve 10 million full self-driving subscriptions.
- Sell one million Optimus Bots.
- Have one million robotaxis operational commercially.
If successful, Musk would control approximately 12% of Tesla’s shares, reflecting the high stakes of the upcoming vote.
Previous Opposition and Legal Challenges
This isn’t the first time Musk’s compensation has faced scrutiny. In 2018, CalPERS opposed a similar package, claiming it was excessively large. A Delaware court sided with the pension fund, labelling the compensation package “unfathomable.” The case has now reached the state’s Supreme Court, which is also reviewing the recent proposal. Musk has a contentious history of navigating shareholder relations.
Importance of the Upcoming Vote
Tesla Chair Robyn Denholm has emphasized the critical nature of the vote on Musk’s compensation. She reminded shareholders that their decisions will ultimately influence whether Musk remains as Tesla’s CEO.
The approaching annual meeting is pivotal for both Musk and the future direction of Tesla. Shareholders are urged to consider if retaining Musk is beneficial for the company’s long-term growth and leadership in the autonomous solutions market.
