Norway’s sovereign wealth fund wants to shoot down Elon Musk’s planned $56 billion compensation package at Tesla’s annual shareholder meeting, scheduled for Thursday this week, June 13.
The fund, managed by Norges Bank Investment Management (NBIM), said on Saturday it “voted against a proposal by Tesla to ratify performance-based stock options to Elon Musk, consistent with our vote on the same grant in 2018.”
“While we appreciate the significant value generated under Mr. Musk’s leadership since the award date in 2018, we remain concerned about the overall size of the award, its structure given the performance triggers, the dilution and the lack of risk mitigation of key persons.” added in the statement on its website. “We will continue the dialogue with Tesla on these and other topics.”
This is the latest criticism of Musk’s payout following shareholder advisors ISS and Glass Lewis’ recommendation last month to vote against it.
The billion-dollar prize was first proposed in 2018, referenced by NBIM. Under the terms, Musk would earn nothing from his Tesla toil unless the automaker’s market capitalization grew from $53 billion to $650 billion. It peaked at $1.24 trillion in November 2021, but now hovers at $556.13 billion.
Musk would get a payday of $56 billion, although that figure is now closer to $46 billion as Tesla’s stock has been the worst performer on the S&P500 in calendar 2024 so far, down about 28 percent.
Even before that, a Delaware Court of Chancery struck down the compensation in January, agreeing with a shareholder who felt the package was excessive. A judge ruled that the award was illegally approved, citing Musk’s close ties to the board and his significant influence over Tesla.
In April, Tesla urged shareholders to reinstate the eye-watering compensation deal, putting it on the agenda for Thursday’s meeting.
The Comptroller of New York City and seven financial companies said in May that shareholders should not approve the package.
Last week, Tesla Chairman Robyn Denholm wrote to investors urging them to ratify the payout, warning that Musk could walk if he is shot again.
“Honesty and respect require that we fulfill the collective promise we made to Elon – a promise that was, and fundamentally still is, about keeping Elon’s attention and motivating him to focus on achieving amazing growth for our company,” Denholm wrote.
“Elon’s unique contributions have built Tesla from a company that in 2018 was a loss-making, ambitious company with significant hurdles and challenges to overcome, to what it is today – a company that is literally changing the world by driving so many critical initiatives that make our planet more sustainable while delivering hundreds of billions of dollars in value to everyone who invested in Tesla’s dream. These contributions must be respected.”
“We all know Elon is one of the richest people in the world, and he would remain so if Tesla reneged on the promise we made in 2018. Elon is not a typical CEO, and Tesla is not a typical company. , the typical way companies compensate key executives won’t lead to results for Tesla.
She added: “Motivating someone like Elon requires something different. This is one of the key reasons why the Award also requires Elon to hold on to any shares he receives upon the exercise of stock options for five years after he exercises the options – which can only serve to incentivize him to continue delivering value to Tesla and our shareholders.”
The course of a number of major shareholders is clear, but would Musk really stop if he does not get his hands on those dollars?
Let us know what you think in the comments below. ®