Norway’s sovereign wealth fund has declared its intention to oppose Tesla’s proposed $1 trillion (£765 billion) compensation package for Chief Executive Elon Musk.
The largest national wealth fund stated that it acknowledges “the remarkable value created under Mr. Musk’s visionary leadership” but will vote against his performance-based award.
“In line with our stance on executive compensation, we are worried about the total remuneration, dilution, and the absence of risk mitigation for essential personnel.” “We remain eager to engage in constructive discussions with Tesla on this and other matters.”
The alert from Norges Bank, Tesla’s seventh-largest single shareholder with $17 billion in stock, arrived just two days prior to Tesla’s annual shareholder meeting.
On Thursday, shareholders are expected to vote on an extraordinary incentive proposal that could propel Elon Musk to become the world’s first trillionaire.
If Musk escalates Tesla’s valuation from approximately $1 trillion to $8.5 trillion over the next decade, he would be granted new shares, and his ownership stake would increase from nearly 16% to over 25%.
This would boost the wealth of the world’s richest man to over $2 trillion.
Tesla Chairman Robin Denholm emphasized that this vote is crucial to retaining Musk, 54, as the company’s CEO, stating in a letter to shareholders that the company might lose “significant value” should he depart.
Last year, the Norwegian Oil Fund opposed Musk’s $56 billion compensation plan, which was the largest in U.S. corporate history at the time. Although it was approved by shareholders in June, a Delaware court later rejected it a second time in December.
Nikolai Tangen, the chief executive of the Norwegian fund, had invited Musk and other CEOs to a dinner in Oslo last year, but Musk declined after the fund voted against the $56 billion compensation package.
Text exchanges between Tangen and Musk were disclosed in a Freedom of Information request by Norwegian business magazine DN. The newspaper reported that Musk texted Tangen in October last year: “It’s not often that I ask you for a favor and you say no. Then you shouldn’t ask me for a favor until I do something more than make up for it. A friend is a friend.”
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Shareholders are split on the proposed deal, with two significant shareholder advisory firms, Glass Lewis and ISS, both advising investors to reject the $1 trillion package.
Several major pension funds are also against the pay structure, including the American Federation of Teachers and the California Public Employees’ Retirement System, the largest public system in the nation.
Musk, being Tesla’s largest single shareholder, also has a vote on the proposal.
Last month, Tesla’s president stated on the social media platform X, which he acquired in 2022, “Tesla is worth more than all the other car companies combined. Which CEO would want to run Tesla? It wouldn’t be me.”
Tesla was approached for comment.
Source: www.theguardian.com
