UPDATE: In a significant blow to Tesla CEO Elon Musk, Norway’s sovereign wealth fund has just voted against his proposed $1 trillion pay package. Norges Bank Investment Management, which oversees a massive $2 trillion fund, announced this decision on Tuesday, just two days before a crucial shareholder vote scheduled for Thursday.
This development heightens tensions in the ongoing debate over Musk’s compensation, as the fund expressed concerns regarding the size of the package, potential dilution, and the lack of measures to address Musk’s “key person risk” at Tesla. Notably, Norges Bank is Tesla’s sixth-largest institutional investor, holding a 1.2% stake in the company.
The fund’s rejection is particularly notable as it is the largest institutional investor to publicly disclose its vote on Musk’s pay plan. This comes amidst a backdrop of opposition from various investors, including the California Public Employees Retirement System (CalPERS) and the New York State Retirement Fund, along with proxy firms Glass Lewis and ISS, which have all urged shareholders to vote against the package. In response, Musk has labeled these proxy firms as “corporate terrorists” during a recent earnings call.
Earlier this year, leaked messages revealed a tense exchange between Musk and Norges’ CEO Nicolai Tangen, where Musk remarked, “friends are as friends do.” This indicates strained relations as the vote approaches.
The proposed compensation plan would potentially reward Musk with around $1 trillion in Tesla shares, contingent upon achieving a series of ambitious goals over the next decade. These include increasing Tesla’s market capitalization to $8.5 trillion, selling 1 million Optimus robots, and significantly boosting annual earnings beyond those of tech giants like Meta and Google.
As the annual shareholder meeting draws closer, the spotlight remains on major investors like Vanguard and BlackRock, Tesla’s two largest institutional shareholders, who have yet to announce their voting intentions. With the stakes high and opinions divided, all eyes will be on the results of the vote on Thursday.
Tesla has not provided immediate comments regarding the fund’s decision. As the situation develops, investors and analysts alike are awaiting further details on how this rejection will impact Musk’s future with Tesla and the company’s trajectory.
