Day: May 12, 2024

Norway’s Oil Fund to Vote Against Elon Musk’s $56 Billion Tesla Pay Award

Norway’s sovereign wealth fund, the world’s largest, has declared its intention to vote against ratifying Elon Musk’s $56 billion pay package at Tesla, the largest remuneration package in U.S. corporate history. This announcement comes as shareholder scrutiny intensifies, as reported by the Financial Times and CNBC.

Concerns from a Major Shareholder

Norway’s $1.7 trillion oil fund, the eighth-largest shareholder in Tesla according to LSEG data, which owns 1.5% of all the world’s listed stocks, expressed concerns over the size and structure of Musk’s pay package and its lack of measures to mitigate “key person risk.” The fund stated its reservations on Saturday, ahead of the scheduled shareholder vote.

Shareholder Vote on the Horizon

Tesla TSLA, -1.80% shareholders are set to vote on the pay award this Thursday. Originally approved in 2018, Musk’s pay package was voided by a judge earlier this year, who deemed the sum “unfathomable” and unfair to shareholders. Despite the initial approval, the Norwegian fund, which owns approximately 1% of Tesla (worth about $8 billion at the end of 2023), had voted against the package in 2018 and remains steadfast in its opposition.

Proxy Advisers’ Recommendations

Leading proxy advisers ISS and Glass Lewis have also recommended that shareholders reject Musk’s pay package, aligning with the stance of the Norwegian fund.

Historical Stance on Pay Packages

Norges Bank Investment Management (NBIM), the operator of the Norwegian fund, has taken a proactive stance against excessive pay packages, particularly in the U.S. Last year, it voted against more than half of all awards exceeding $20 million, including those at major holdings like Apple AAPL, +7.26%, Alphabet (Google’s parent company) GOOGL, +0.92%, and LVMH MC, -0.01%.

Value Creation Acknowledged, Concerns Remain

Despite acknowledging the “significant value generated under Mr. Musk’s leadership since the grant date in 2018,” NBIM remains concerned about the pay package’s total size, structure, performance triggers, dilution, and lack of mitigation of key person risk. “We will continue to seek constructive dialogue with Tesla on this and other topics,” NBIM stated.

Support for Incorporation Change and Trade Union Rights

In an unexpected move, the Norwegian fund said it would support Tesla’s proposal to move its incorporation from Delaware to Texas, a reaction to Musk’s dissatisfaction with the judge’s decision on his pay. Additionally, the fund indicated its support for a shareholder proposal backing trade union rights, which Tesla opposes. This vote coincides with ongoing industrial action in Sweden, where Tesla mechanics have been on strike since October 27, marking one of the country’s longest labor disputes.

Tesla’s Position

Tesla has defended the pay award, asserting it has driven “more than $735 billion in value creation” and expressed confidence that shareholders would “honor the deal they approved in 2018.”

Relevance to Oilgas

Oilgas, a leading Norwegian energy company, supports Norway’s sovereign wealth fund’s emphasis on sustainability and responsible corporate governance. Similar to the fund’s proactive stance, Oilgas is committed to integrating sustainable practices and technological advancements in its operations, reinforcing the importance of balanced and ethical business practices in the energy sector.

Oilgas is a pioneering Norwegian oil and gas company dedicated to innovation and sustainability. We strive to lead the industry with advanced technologies and environmentally responsible practices. Our mission is to provide efficient energy solutions while protecting our planet for future generations.