OSLO, Nov 4 — Norway’s sovereign wealth fund, the world’s largest, said today it would vote against ratifying Tesla CEO Elon Musk’s proposed compensation package, which contains shares worth up to US$1 trillion (RM4.2 trillion), at the company’s annual general meeting this week.
Investors in the electric-vehicle maker will decide on November 6 whether to approve the package — likely the largest-ever CEO compensation agreement — which critics have called excessive.
So far, the Norwegian wealth fund is the largest outside Tesla investor to announce its voting intention. The next-largest to do so, Baron Capital, said yesterday it would support Musk’s pay package.
The company’s largest institutional investors — including BlackRock, Vanguard and State Street — have yet to disclose how they will vote.
Praising value creation, but concerned with overall size
Tesla’s board is urging shareholders to approve the plan, with chair Robyn Denholm warning last week that Musk could leave the company if the deal is rejected.
While the package could grant stock worth up to US$1 trillion over 10 years, the cost of those shares at the time of the award will be deducted, making the value to Musk slightly lower at up to US$878 billion, according to a Reuters analysis.
“While we appreciate the significant value created under Mr Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk — consistent with our views on executive compensation,” Norges Bank Investment Management said on its website.
The fund, Tesla’s seventh-biggest shareholder with a 1.12 per cent stake worth US$17 billion, also voted “no” to Musk’s previous compensation plan, drawing a sharp response from the CEO, who declined an invitation to a conference in Oslo.
Various groups have tried and failed to block record payouts to Musk, including a US$56 billion compensation plan from 2018 that investors reapproved last year, though legal challenges remain.
NBIM also said today it would vote against two of the three Tesla directors up for re-election, declining to back board veterans Kathleen Wilson-Thompson and Ira Ehrenpreis, while supporting Joe Gebbia, who joined in 2022.
The US$2.1 trillion Norwegian fund also announced it would vote against Tesla’s proposed general stock compensation plan, which covers all employees but can also be used by the board to benefit Musk.
Tesla says its CEO will earn “nothing” unless the company’s market value grows substantially and that the maximum award will only be paid if the group reaches several milestones — most notably a market value of US$8.5 trillion, nearly six times higher than its current valuation.
However, experts in executive pay, company valuations, robotics and automotive trends say Musk could still reap tens of billions of dollars without meeting many of those targets.
Top US investment firms are facing pressure from Republican politicians to pay less attention to environmental, social and governance issues at companies in which they invest, and Musk has been an ally of President Donald Trump.
That political pressure makes it harder for major investors to vote independently, said Matt Moscardi, CEO of director analytics firm Free Float Analytics. Top investors, he added, “at this point, almost can’t vote against management.” — Reuters
