Norway's sovereign wealth fund opposes Musk's $56bn Tesla pay deal
Norway's $1.7 trillion sovereign wealth fund, Norges Bank Investment Management (NBIM), has declared its intention to vote against the proposed $56 billion pay package for Tesla CEO Elon Musk. This decision, announced ahead of Tesla's annual general meeting next week, mirrors NBIM's previous opposition in 2018 to Musk's pay package. The fund expressed concerns over "the total size of the award, the structure given performance triggers, dilution, and lack of mitigation of key person risk."
NBIM reiterates 2018 stance on Musk's pay package
This is the second time Musk's pay package has been presented to shareholders. The initial approval in 2018 was nullified by a judge, citing insufficient information for investors, despite three-quarters of them supporting the deal. NBIM maintains its opposition, stating its decision is "consistent with our vote on the same award in 2018," and it will "continue to seek constructive dialog with Tesla on this and other topics."
NBIM supports other proposals despite pay package opposition
NBIM plans to support a shareholder proposal urging Tesla to adopt new policies related to collective bargaining as well as freedom of association. This proposal is in response to a seven-month-long strike by Swedish Tesla technicians. The fund, which held a 0.98% stake of $7.72 billion in Tesla as of end-2023, also intends to back the relocation of the company's corporate home from Delaware to Texas, and the election of Musk's younger brother, Kimbal, 51, to Tesla's board of directors.
NBIM's history of voting against excessive CEO pay
NBIM has a history of opposing excessive CEO pay. Last year, it voted against more than half of US CEO pay packages exceeding $20 million, warning that they did not align with long-term value creation for shareholders. This fund usually discloses its voting intentions five days before the annual general meetings (AGMs) of the firms it invests in.
Potential impact of NBIM's vote on Tesla
The outcome of the shareholder vote is advisory, but a loss could be a significant embarrassment for Tesla's board and its top executive. Musk has threatened to build goods outside of Tesla if he cannot increase his equity holdings in the company, something the pay deal would permit him to do. The fund's decision could potentially influence other shareholders' votes at the upcoming annual general meeting.
