Norway's sovereign wealth fund, valued at $2 trillion, has announced its decision to vote against Elon Musk's pay package during Tesla's upcoming annual shareholder meeting. This move signifies a notable rebellion against management guidance and Musk's recent threats to resign if the pay proposal is rejected. Managed by Norges Bank Investment Management (NBIM), which oversees the world's largest sovereign wealth fund and holds a significant stake in Tesla, this decision underscores the fund's serious concerns regarding executive compensation.
In a statement released on Tuesday, NBIM revealed that it had already cast its vote against Musk's remuneration package, highlighting key issues such as the overall size of the award, potential dilution, and the absence of measures addressing key person risk. "While we appreciate the significant value created under Mr. Musk's visionary role, we are concerned about the total size of the award," the fund noted, emphasizing its commitment to a more responsible approach to executive compensation.
As of its latest filings in June, Norway's wealth fund holds a 1.14% stake in Tesla, with the investment valued at approximately 118.3 billion Norwegian kroner, equivalent to $11.6 billion. Following the announcement, Tesla shares experienced a decline of 2.5% in premarket trading, reflecting investor sentiment amid these unfolding events.
Tesla's Board of Directors is advocating for a pay plan that could potentially grant Musk nearly $1 trillion in stock over the next decade, contingent on the company meeting specific milestones. This ambitious proposal has raised eyebrows and garnered significant opposition from various stakeholders, including the Take Back Tesla campaign, a coalition of unions and corporate watchdogs, which has urged shareholders to reject the deal. Additionally, well-known proxy advisory firms, Institutional Shareholder Services and Glass Lewis, have also recommended that investors vote against the compensation package.
In response to the negative recommendations, Musk has expressed his frustration, labeling ISS and Glass Lewis as "corporate terrorists" during an analyst call. He defended the company's value on social media, asserting that "Tesla is worth more than all other automotive companies combined." Musk's public remarks highlight his determination to position Tesla as an industry leader, despite the growing concerns surrounding his compensation.
This is not the first time Musk has clashed with NBIM regarding his pay. Last year, the fund opposed the reinstatement of Musk's $56 billion pay deal after it was rescinded by a U.S. judge. Despite NBIM's objections, the compensation package, which is the largest public executive compensation plan in U.S. history, was ultimately approved by Tesla's shareholders. Following the vote, communications between Musk and NBIM Chief Executive Nicolai Tangen were made public, revealing Musk's disappointment over a declined dinner invitation in Oslo, indicating a strained relationship between the two parties.
Currently, Elon Musk holds the title of the world's wealthiest person, with an estimated net worth of $504.1 billion, according to Forbes. As Tesla navigates these complex discussions regarding executive compensation, the company's future remains a subject of keen interest for investors and industry watchers alike. Representatives for Musk and Tesla have not yet commented on NBIM's vote against the proposed compensation package, leaving many to speculate on the potential outcomes of this high-stakes shareholder meeting.
