Norway’s $1.7 trillion sovereign wealth fund, Norges Bank Investment Management (NBIM), announced its decision to vote against ratifying Tesla CEO Elon Musk’s $56 billion pay package. The fund, which is Tesla’s eighth-largest shareholder, expressed concerns about the excessive size of the award, the structure of the package, performance triggers, dilution, and the lack of mitigation of key person risk. Despite acknowledging the significant value generated under Mr. Musk’s leadership since the grant date in 2018, the fund remains critical of the total size of the compensation package.
In 2018, Norges Bank Investment Management had already voted against Musk’s pay package. The fund has been vocal about its stance on excessive CEO pay, having voted against more than half of U.S. CEO pay packages exceeding $20 million last year. The fund’s focus on long-term value creation for shareholders has been a driving factor behind its opposition to such high compensation levels.
In addition to voting against Musk’s pay package, the sovereign wealth fund also announced its intention to support a shareholder proposal calling on Tesla to adopt a freedom of association and collective bargaining policy. This move reflects a broader commitment to advocating for labor rights and ensuring that companies like Tesla prioritize the well-being of their workers.
Tesla’s stance on labor rights has come under scrutiny in the Nordic region, particularly in Sweden, where the company has faced industrial action and strikes by mechanics since October 27. The refusal to accept demands for collective bargaining rights has sparked backlash from unions and pension funds. The wealth fund’s decision to back shareholder proposals related to labor rights demonstrates its support for ensuring fair working conditions and practices within companies like Tesla.
The sovereign wealth fund also voted in favor of transferring Tesla’s state of incorporation from Delaware to Texas, a move that Musk had sought after a Delaware judge invalidated his pay package. Additionally, the fund expressed its support for a proposal to elect Musk’s younger brother, Kimbal Musk, to Tesla’s board of directors. This decision aligns with the fund’s previous voting patterns, as it had previously supported Kimbal Musk’s election in 2018.
Overall, Norges Bank Investment Management’s opposition to Elon Musk’s $56 billion pay package reflects a broader concern about executive compensation levels, governance structures, and labor rights within companies like Tesla. By engaging in shareholder activism and voting against excessive pay packages, the fund aims to promote long-term value creation, accountability, and responsible corporate practices in the companies it invests in.
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