Norway's Fund to Vote Against Elon Musk's $56 Billion Pay Deal

Norges Bank Investment Management, which oversees Norway's sovereign wealth fund, is set to oppose Elon Musk's $56 billion pay package at Tesla's upcoming shareholder meeting.

In a recently released statement, Norges Bank Investment Management acknowledged the value Musk's leadership has brought since the 2018 grant. Still, the fund is concerned about the award's total size, performance trigger structure, potential shareholder dilution, and the lack of measures to mitigate key person risk.

Valued at $1.7 trillion, Norway's sovereign wealth fund ranks as the world's eighth-largest shareholder in Tesla, according to Reuters. Earlier this week, Robyn Denholm, Chair of Tesla's Board of Directors, appealed for "reciprocal respect" in a letter to shareholders.

The Tesla CEO has no "shortage of ideas, and in other places, he can make an incredible difference in the world," Denholm wrote. In a 2022 interview with the Financial Times, Nicolai Tangen, CEO of Norway's sovereign wealth fund, expressed concern about rising corporate greed, highlighting its negative impact on shareholders through dilution.

Tesla shareholders are set to vote on Elon Musk's US$56 billion pay package this Thursday. In the lead-up to the vote, Musk has reportedly courted shareholder support by offering exclusive factory tours to a select group of just 15 individuals.

Originally approved by investors in 2018, Musk's pay deal faced a hurdle in January when a Delaware judge struck it down, calling the sum "unfathomable." This decision forced the board to seek shareholder approval once again.

In a move that could influence shareholder voting, two major proxy advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis, came out against the pay package last month.

"This is obviously not about the money. We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018," Denholm said about Musk's fortune.

Despite record sales exceeding 1.8 million electric vehicles globally in 2023, Tesla, led by the world's third-richest person, Elon Musk (worth $203 billion according to the Bloomberg Billionaires Index), has faced increased scrutiny in recent months.

Retail Investors Hold Sway in Tight Vote

Earlier this week, CNBC reported on emails suggesting Musk has been allocating resources from Tesla to his other ventures, social media platform X and AI startup xAI. Earlier this year, tensions flared between Tesla and its investors when Musk publicly stated on Twitter his discomfort with leading Tesla's AI and robotics advancements without securing at least 25 percent voting control.

Some investors interpreted this as a veiled threat, accusing him of "blackmail." Retail investors, a significant portion of Tesla's ownership base, historically favour management but have low voting participation.

Tesla's June 13th annual meeting has become pivotal for Musk's leadership. Following a Delaware court's rejection of his hefty pay package, shareholders will vote to re-approve it. This vote carries significant weight, as Musk's potential ownership could exceed 20 percent with approval. A rejection would be a public rebuke with uncertain repercussions.

Tesla's agenda includes reincorporating in Texas and re-electing two board members, one of whom is Elon Musk's brother, Kimbal. In April, Tesla underwent a significant restructuring, with Musk dissolving the entire Supercharger team, led by senior director Rebecca Tinucci. This decision faced criticism from both Tesla investors and partners.