Core Viewpoint - The California Public Employees' Retirement System (CalPERS) plans to vote against Elon Musk's proposed $1 trillion compensation package from Tesla, which poses a significant obstacle to the company's efforts to grant Musk one of the largest compensation plans in U.S. corporate history [2][3]. Group 1: Compensation Proposal - CalPERS holds approximately 5 million shares of Tesla stock and believes the proposed CEO compensation is significantly larger than that of peers in the industry [2]. - The compensation plan is a 10-year agreement that requires Musk to meet specific performance targets to receive full rewards, potentially increasing his shareholding to at least 25% if targets are met [3]. Group 2: Market Reaction - If the compensation proposal is rejected, Morgan Stanley predicts Tesla's stock could drop by over 10% immediately, reflecting a potential loss of confidence in Musk's leadership [4]. - The rejection of the compensation plan may be interpreted as a "vote of no confidence" in Musk, leading to a significant market reaction and casting doubt on the company's strategic future [4]. Group 3: Leadership and Talent Retention - Tesla's chairman, Robyn Denholm, warned that a rejection of Musk's compensation could lead to his departure, which would cast a shadow over the company's future [4]. - The ability to attract and retain top talent in AI and engineering is closely tied to Musk's leadership, and a failed compensation plan could create serious recruitment challenges for the company [5].

Core Viewpoint - CalPERS plans to vote against Elon Musk's $1 trillion compensation package for Tesla, which poses a significant obstacle to the company's attempt to grant one of the largest compensation plans in U.S. corporate history [2][3]. Group 1: Compensation Plan Details - CalPERS holds approximately 5 million shares of Tesla stock and believes the proposed CEO compensation is significantly larger than that of peers [3]. - The $1 trillion compensation plan is a 10-year proposal that requires Musk to meet specific performance targets to receive full rewards, potentially increasing his shareholding to at least 25% if targets are met [4]. Group 2: Market Reactions and Predictions - Tesla's stock price fell over 4.6%, underperforming the broader U.S. market and most large tech companies [4]. - Morgan Stanley warns that if Musk's compensation plan is rejected at the upcoming shareholder meeting, Tesla's stock could face an immediate drop of over 10%, casting a shadow over the company's strategic future [7][8]. Group 3: Leadership and Talent Implications - The failure of the compensation plan may be interpreted as a "vote of no confidence" in Musk's leadership, potentially leading to significant market reactions and strategic uncertainties for Tesla [8][9]. - There are concerns that Musk might choose to leave Tesla if the plan is rejected, which could severely impact the company's future and its ability to attract and retain top talent in AI and engineering [9][11].