“The future of Tesla CEO Elon Musk’s colossal renumeration package hangs in the balance as dissension rises amongst investors, including Norway’s prominent sovereign wealth fund, who have expressed consternation over the size of the payout. Operated by Norges Bank Investment Management, this influential fund has announced its intent to vote against the scheme at Tesla’s annual shareholders meeting slated this coming Thursday.
Elon Musk’s compensation plan, heralded as one of the largest of its kind, recently registered a value of $44.9 billion. It’s truly behemoth, when taking into consideration that only at the beginning of this year, it had a hefty valuation of roughly $56 billion. Consequently, the package has incited controversy, leading to two renowned shareholder advisory firms, ISS and Glass Lewis, advocating against the payout in May.
The Norwegian wealth fund issued a statement on its website acknowledging Musk’s transformative role in Tesla’s value creation since 2018. However, the concerns surrounding the magnitude of the award, prodigious performance triggers, potential dilution, and the apparent absence of a comprehensive strategy to counter the risk of Musk’s departure, were highlighted as motivations for their opposition to the package. The fund has expressed its commitment to fostering an open dialogue with Tesla, aiming to address their concerns on various topics.
Earlier this year, a Delaware judge declined Musk’s mega-deal, prompting Tesla to call on its shareholders to breathe life back into it. Norway’s sovereign wealth fund, known as the Government Pension Fund Global, possessing a fractional yet substantial 0.98% stake, equivalent to roughly $7.72 billion in Tesla, had initially voiced its dissent in 2018.
Norway’s fund, an important player in the international investments scene, is fueled by the country’s oil and gas revenues. Its aim is to safeguard the provision of pensions for future generations, and it currently boasts a staggering value of 17.80 trillion Norwegian Krone ($1.67 trillion). Given its enormous financial muscle, investing all the funds within Norway could risk superheating the economy. Thus, the fund wisely extends its influence to a diverse set of 72 countries around the globe.
While registering their disapproval for Musk’s compensation plan, the fund also disclosed plans to support several shareholder propositions that Tesla’s management advised voting against. This includes a call for the adoption of a non-interference policy relating to freedom of association and collective bargaining, the institution of a simple majority vote, a movement to declassify the board of directors, as well as recommendations to publicize reports on Tesla’s efforts to prevent harassment and discrimination.”
