It was reported on Saturday by the Financial Times and CNBC that the world’s biggest sovereign wealth fund said it would vote against approving Elon Musk’s $56 billion pay package at Tesla. This is the biggest pay package in U.S. business history, and shareholders are looking closely at it.
LSEG data shows that Norway’s $1.7-trillion oil fund is the eighth-largest shareholder in Tesla. It also owns 1.5% of all the world’s listed stocks. On Saturday, the fund said it was “concerned” about the size and structure of the pay plan and how it doesn’t reduce “key person risk.”
Thursday is the day that Tesla TSLA, -0.26% owners will vote on the award. Musk was given the biggest salary ever for a CEO in corporate America. It was accepted in 2018, but earlier this year, a judge threw it out because it was unfair to shareholders and called the amount “unfathomable.”
The Norwegian fund owns about 1% of Tesla and will be worth $8 billion by the end of 2023. It voted against the pay package when it was first offered in 2018 and said it had not changed its mind.
ISS and Glass Lewis, the two biggest proxy advisory firms, have also told shareholders to turn down Musk’s pay deal.
The oil fund is speaking out against pay deals more and more. In the U.S., it has voted against more than half of all awards worth more than $20 million. Some of its biggest interests, like Apple AAPL, +1.24%, Alphabet GOOGL, -1.28%, which owns Google, and LVMH MC, -0.03%, did not agree to pay deals last year.
The fund said it liked “the meaningful value created under Mr. Musk’s leadership since the grant date in 2018.”
The fund manager, Norges Bank Investment Management (NBIM), said, “we remain concerned about the total size of the award, the structure given performance triggers, dilution, and lack of mitigation of key person risk.”
“We will keep trying to have a good conversation with Tesla about this and other issues,” NBIM said.
But it said it would vote in favor of Tesla moving its incorporation from Delaware to Texas. This was suggested because Musk was upset with the judge’s ruling on Musk’s pay.
Musk was given the pay deal in 2018 when the electric car company was having trouble making enough cars for everyone. It was conditional on Musk raising the price of Tesla’s shares by a lot.
The Norwegian fund also said it would support a shareholder plan that backs the rights of trade unions, even though Tesla is against it. Tesla is still dealing with labor unrest in Sweden. Its mechanics have been on strike since October 27 in one of the longest labor issues in the country.
Tesla has previously said that the pay award has created “more than $735 billion in value” and that it is sure its owners will “honor the deal they approved in 2018.”
