Shares of electric vehicle maker and robotaxi company Tesla (TSLA 4.64%) traded nearly 4% lower as of 12:25 p.m. ET today. Big tech is struggling, and there appears to be more drama brewing over Tesla CEO Elon Musk's massive proposed pay package.
California's pension fund tells Musk no
Big tech sold off today after investors were unimpressed with earnings reports from Meta Platforms and Microsoft, sending other large tech stocks down. Federal Reserve chair Jerome Powell yesterday said publicly that investors shouldn't count on a guaranteed interest rate cut at the Fed's December meeting.
Image source: Tesla.
But the big news impacting Tesla revolves around the California Public Employees' Retirement System (Calpers) pension fund saying that it will not support a proposed pay package for Musk that could reach $1 trillion over the next 7.5 years if Tesla achieves ambitious financial targets. Calpers owns 5 million shares.
NASDAQ: TSLA
Key Data Points
"The CEO pay package proposed by Tesla is larger than pay packages for CEOs in comparable companies by many orders of magnitude. It would also further concentrate power in a single shareholder," a Calpers spokesperson reportedly said in a statement.
Love him or hate him, Musk generates exuberance for Tesla's stock
Tesla's board seemed to indicate that Musk could leave the company or be less devoted if the pay package is not approved. When the Wall Street Journal reported earlier this year that Tesla's board was looking for a new CEO, Tesla's stock also struggled.
This, in my view, shows that investors view Musk as critical for Tesla's future success. The stock now has close to a $1.4 trillion market cap and trades close to 277 times forward earnings, which is a much higher multiple than others in the "Magnificent Seven." I prefer to stay away from stocks trading this richly.
