Norway Sovereign Wealth Fund to Vote Against Elon Musk’s Pay Package

Norway’s $1.7 trillion sovereign wealth fund, one of Tesla’s largest shareholders, announced on Saturday that it will vote against ratifying Tesla CEO Elon Musk’s $56 billion pay package. This comes after a Delaware judge invalidated the pay package earlier this year.

Fund’s Position and Concerns:

The fund, operated by Norges Bank Investment Management (NBIM), is Tesla’s eighth-biggest shareholder, holding a 0.98% stake worth $7.7 billion.

Despite appreciating the significant value generated under Musk’s leadership since 2018, NBIM remains concerned about the pay package due to its size, performance triggers, dilution, and lack of mitigation of key person risk. NBIM had also voted against the package in 2018.

Critical Stance on CEO Pay:

NBIM has been critical of excessive CEO pay and voted against more than half of U.S. CEO pay packages above $20 million last year, arguing that they did not align with long-term value creation for shareholders.

The fund emphasized its intent to continue constructive dialogue with Tesla on this and other topics.

Support for Labour Rights:

The fund will support a shareholder proposal calling on Tesla to adopt a freedom of association and collective bargaining policy, aligning with labor unions seeking more influence over the U.S. carmaker.

This vote comes amid ongoing industrial action in Sweden, where Tesla mechanics have been on strike since October 27 in one of the country’s longest labor disputes. In 2022, the fund backed a similar proposal urging Tesla to respect labor rights, including freedom of association and collective bargaining.

State of Incorporation and Board Election:

NBIM will also vote for transferring Tesla’s state of incorporation to Texas from Delaware, following the Delaware judge’s invalidation of Musk’s pay. Additionally, the fund supports the proposal to elect Musk’s younger brother Kimbal, 51, to Tesla’s board of directors, a position they had supported in 2018.

Tesla shareholders will vote on Musk’s pay package and the re-election of directors, including Kimbal Musk, at their annual meeting scheduled for June 13.