Norway’s sovereign wealth fund has said it will vote against a $1 trillion pay package for Tesla CEO Elon Musk.
The fund, which is the world’s largest national wealth fund, said that while it appreciated “the significant value created under Musk’s visionary role,” it would vote against his performance award.
“We are concerned about the overall size of the compensation, dilution and failure to mitigate key person risk, consistent with our views on executive compensation,” he said. “We will continue to seek constructive dialogue with Tesla on this and other issues.”
The warning from Norges Bank, which is Tesla’s seventh-largest individual shareholder with a stake valued at $17 billion, comes two days before the automaker holds its annual shareholder meeting.
On Thursday, investors will vote on proposals for an unprecedented incentive package that could make Elon Musk the world’s first billionaire.
If Musk increases Tesla’s value from about $1 trillion to $8.5 trillion over the next 10 years, Musk will receive new shares that would boost his stake in the company from nearly 16% to more than 25%.
This would increase the fortune of the world’s richest man to more than $2 trillion.
Tesla Chairman Robyn Denholm has argued that the vote is essential to retaining Musk, 54, as the company’s CEO, writing in a letter to shareholders that the company risks losing “significant value” if he were to leave.
Last year, the Norwegian oil fund voted against what was then the largest pay package in American corporate history at $56 billion for Musk. The deal was approved by shareholders in June, but was rejected a second time by a Delaware court in December.
Nicolai Tangen, CEO of the Norwegian fund, invited Musk and other CEOs to dinner in Oslo last year. However, Musk declined the invitation after the fund voted against the $56 billion pay deal.
A text message exchange between Tangen and Musk was revealed in a freedom of information request by Norwegian trade publication DN. He reported that Musk wrote to Tangen in October last year: “When I ask you for a favor that I rarely do and you refuse, then you shouldn’t ask me for one until you’ve done something greater than nothing to make amends. Friends are like friends.”
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Shareholders are divided over the new deal, although two influential shareholder advisory groups – Glass Lewis and ISS – have recommended that investors reject the $1 trillion package.
Some large pension funds have also opposed the pay package, including the American Federation of Teachers and the California Public Employees’ Retirement System, the largest public plan in the United States.
Musk, who is Tesla’s largest individual shareholder, can also vote on the proposal.
Last month, the Tesla boss said on
Tesla has been contacted for comment.
