Norway’s government wealth fund, worth about $2 trillion, has decided to vote against Elon Musk’s $1 trillion pay package at Tesla. This decision will be reflected at the annual shareholder meeting on November 6. The fund is one of Tesla’s biggest investors, holding a little more than 1% of the company.
The fund’s managers stated their concerns clearly. They said, “While we appreciate the significant value created under Mr. Musk’s visionary role, 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. We will continue to seek constructive dialogue with Tesla on this and other topics.” They believe the pay plan, if all targets are met, could reward Musk with shares totaling up to $1 trillion over the next ten years. However, according to an analysis, the actual net value to Musk would be a bit lower, around $878 billion, after subtracting the initial cost of those shares.
How the pay plan works
Tesla’s board proposed that Musk could receive large amounts of stock if the company hits several big goals. These include major boosts to car production, company profit, and stock price. In total, Musk could get up to 12% more of the company’s shares in a dozen separate rewards. The board wants shareholders to support this plan, warning that Musk might leave Tesla if the package is rejected.
Investors are divided
The possible pay deal has divided investors. Norway’s fund is the largest outside investor to share its voting decision so far. Baron Capital Management, holding roughly 0.4% of Tesla stock, said it will support Musk. Baron’s founder described Musk as “the ultimate ‘key man’ of key man risk,” adding that he is essential for Tesla’s success. Still, some of Tesla’s biggest institutional investors, like BlackRock, Vanguard, and State Street, haven’t yet said how they will vote. Last year, the Norwegian fund also voted against Musk’s $56 billion pay deal, which was later rescinded, and they gave similar reasons for their “no” vote at that time.
The vote takes place during Tesla’s annual meeting, with more than a dozen proposals on the table. Still, Musk’s possible compensation is getting the most attention because of its size. In response to news of the opposition, Tesla’s stock fell over 2% in early trading.
In summary, Norway’s sovereign wealth fund is voting against Musk’s massive pay package at Tesla. They worry about the cost, effects on other shareholders, and dependance on one leader. Other funds and investors continue to weigh their decisions ahead of the meeting.
You may also like to read:
- Elon Musk makes largest-ever Tesla stock buy »
- Tesla set to launch FSD subscription gifting this holiday »
- Tesla unveils AI5 chip, 40 times faster than AI4 »
We’ve launched an official Tesla Owners Online Forum. Join early and claim your "Founding Fuel" badge.
