Norway’s $1trn wealth fund plans to reject Elon Musk’s Tesla pay deal

Tesla owner, Elon Musk, faces a new hurdle as Norway’s $1 trillion sovereign wealth fund has announced it will vote against his proposed Tesla pay deal.

Norges Bank, the fund’s operator and Tesla’s seventh-largest shareholder with a $17bn stake, issued its decision ahead of Tesla’s annual shareholder meeting.

The world’s largest national wealth fund said that while it recognised “the significant value created under Musk’s visionary role”, it could not back the performance award.

“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,” the fund said. “We will continue to seek constructive dialogue with Tesla on this and other topics.”

Norges Bank, the fund’s operator and Tesla’s seventh-largest shareholder with a $17bn stake, issued its decision ahead of Tesla’s annual shareholder meeting.

On Thursday, investors are set to vote on a proposed $1tn incentive package that could make Musk the world’s first trillionaire. If he grows Tesla’s value from about $1tn to $8.5tn within a decade, he would gain new shares, increasing his ownership from nearly 16% to more than 25%.

The plan could lift the billionaire’s net worth to over $2tn.

Tesla chair Robyn Denholm defended the proposal, saying it is vital to retain Musk as chief executive. In a letter to shareholders, she warned the company could lose “significant value” if he were to step down.

Last year, the Norwegian oil fund also voted against what was then the largest pay deal in US corporate history, a $56bn package for Musk. Although shareholders approved it in June, a Delaware court later blocked the deal in December.

Nicolai Tangen, the fund’s chief executive, invited Musk and other corporate leaders to dinner in Oslo last year. Musk declined after the fund opposed his pay deal. According to a text exchange obtained through a freedom of information request, Musk told Tangen: “When I ask you for a favour which I very rarely do, and you decline, then you should not ask me for one until you’ve done something above nothing to make amends. Friends are as friends do.”

Shareholders remain divided on the new package. Influential advisory firms Glass Lewis and ISS have urged investors to reject it, while major pension funds including the American Federation of Teachers and the California Public Employees’ Retirement System have also voiced opposition.

Musk, Tesla’s largest individual shareholder, is eligible to vote on the proposal.

Last month, he posted on X, the platform he acquired in 2022: “Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me.”

Tesla has yet to comment on the fund’s stance.

(The Guardian UK)

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