Elon Musk's $56 billion Tesla pay package to get 'no' vote from Norway's sovereign wealth fund
What are the main reasons Norway's sovereign wealth fund is voting against Elon Musk's $56 billion pay package at Tesla?
Norway's sovereign wealth fund, managed by Norges Bank Investment Management, is voting against Elon Musk's $56 billion pay package at Tesla due to several concerns3. The main reasons are:
- The total size of the award: The fund believes that the compensation package is too large and not in line with long-term value creation for shareholders.
- The structure given performance triggers: The fund is concerned about the structure of the pay package, which is based on performance triggers, and how it might affect the overall value generation for shareholders.
- Dilution: The fund is worried that the pay package could lead to dilution of shares, affecting existing shareholders' stakes in the company.
- Lack of mitigation of key person risk: The fund is also concerned about the lack of measures taken to mitigate the risk associated with having a significant portion of the company's value tied to one individual, Elon Musk.
How did shareholders respond to Elon Musk's pay package in the initial 2018 vote?
In the initial 2018 vote, about three-quarters of investors backed Elon Musk's pay package. However, proxy advisers Institutional Shareholder Services and Glass Lewis & Co. recommended investors reject the proposal, and Norges Bank Investment Management (NBIM), Norway's $1.7 trillion sovereign wealth fund, also voted against the pay package. Despite the opposition, the package was approved by a majority of shareholders.
What was the outcome of the legal challenge to the 2018 shareholder vote on Musk's pay package?
The outcome of the legal challenge to the 2018 shareholder vote on Musk's pay package was that a Delaware judge voided the deal earlier this year, saying investors weren't fully informed of key details. The judge invalidated Elon Musk's $56 billion pay package for his work as Tesla's chief executive, siding with a Tesla shareholder who called the package excessive and unfair1.