Norway’s $1.7 trillion oil fund, the world’s largest sovereign wealth fund, has announced it will vote against Elon Musk’s $56 billion pay award at Tesla, the biggest remuneration package in US corporate history.
According to Financial Times, the fund, which is Tesla’s eighth largest shareholder with about 1 per cent of the company worth approximately $8 billion at the end of 2023, expressed “concern” over the size and structure of the pay package and its failure to mitigate “key person risk”.
The Norwegian fund’s decision comes ahead of a critical shareholder vote on Thursday, following a Delaware judge’s January ruling striking down the award as “an unfathomable sum”.
The fund also voted against the package when it was first proposed in 2018 and maintains its stance against excessive executive compensation. This position is supported by major proxy advisers ISS and Glass Lewis, who have both recommended shareholders reject Musk’s pay package.
Nicolai Tangen, the fund’s chief executive, highlighted the broader issue of excessive corporate pay, stating, “We are seeing corporate greed reaching a level that we haven’t seen before and it’s really becoming very costly for shareholders in terms of dilution,” according to Financial Times.
This stance reflects the fund’s increasing activism against large pay awards, particularly in the US, where it opposed more than half of all pay packages exceeding $20 million last year.
Financial Times notes that the fund’s opposition included voting against pay deals at major companies such as Apple, Google owner Alphabet, and LVMH.
Despite its opposition to the pay package, the Norwegian fund acknowledged the significant value generated under Musk’s leadership and expressed a willingness to engage in constructive dialogue with Tesla on remuneration and other issues.
Additionally, the fund stated it would support Tesla’s proposed move of incorporation from Delaware to Texas, a response to Musk’s dissatisfaction with the judge’s pay decision, and would back a shareholder proposal advocating for trade union rights, which Tesla opposes.
Tesla is currently engaged in a protracted dispute with trade unions in Sweden over its refusal to recognise collective bargaining in the country.
Tesla has defended the 2018 pay award, asserting it has driven “more than $735 billion in value creation” and expressing confidence that shareholders would uphold the deal they approved.
