Key Points:
- Norway’s wealth fund opposes Elon Musk’s $56 billion pay package, which a Delaware judge invalidated.
- As Tesla’s eighth-largest shareholder, the fund has a history of opposing excessive CEO pay and voting against many high-value packages last year.
- The fund supports proposals for Tesla to adopt labor rights policies, reflecting ongoing labor disputes in Sweden.
- The fund backs the proposal to relocate Tesla’s incorporation to Texas and supports Kimbal Musk’s re-election to the board.
On Saturday, Norway’s $1.7 trillion sovereign wealth fund announced that it will vote against ratifying Tesla CEO Elon Musk’s $56 billion pay package, which is set for a shareholder vote next week. This decision follows a Delaware judge’s invalidation of the pay package earlier this year.
The fund’s opposition is significant as Tesla’s eighth-largest shareholder, holding a 0.98% stake valued at $7.7 billion. The largest pay package for any CEO in corporate America was initially approved in 2018. Still, it was voided by the judge, who deemed it unfair to shareholders, labeling the sum “unfathomable.”
Despite acknowledging the substantial value generated under Musk’s leadership since 2018, Norges Bank Investment Management (NBIM), the fund’s operator, expressed concerns over the pay package’s size, performance triggers, dilution, and lack of mitigation for key person risk. The fund also opposed the 2018 package.
NBIM emphasized its commitment to engaging in constructive dialogue with Tesla on this and other matters, underscoring its longstanding criticism of excessive CEO pay. Last year, it voted against more than half of U.S. CEO pay packages exceeding $20 million, arguing they did not align with long-term value creation for shareholders.
In addition to opposing Musk’s pay, the fund will support a shareholder proposal urging Tesla to adopt a freedom of association and collective bargaining policy. This move aligns with labor unions seeking to influence the carmaker, which faces industrial action in Sweden. Tesla’s mechanics have been on strike since October 27, marking one of the country’s longest labor disputes.
Norway’s wealth fund, owning 1.5% of all the world’s listed stocks, previously backed a 2022 shareholder proposal advocating for Tesla to respect labor rights, including freedom of association and collective bargaining. The Nordic region has seen a backlash against Tesla from unions and some pension funds due to its refusal to negotiate collective bargaining rights for Swedish mechanics.
Additionally, the fund will vote to relocate Tesla’s state of incorporation to Texas from Delaware, a move Musk supports following the Delaware judge’s invalidation of his pay package. The fund will also back the re-election of Musk’s younger brother, Kimbal Musk, to Tesla’s board of directors. Kimbal’s re-election will be decided during Tesla’s annual meeting on June 13.
