Norway's sovereign wealth fund aims to zap Musk's monster Tesla pay deal

Concerned about size of award given 'performance triggers' and 'dilution'

Norway's sovereign wealth fund aims 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, operated by Norges Bank Investment Management (NBIM), said on Saturday that it "voted against a Tesla proposal to ratify performance-based stock options to Elon Musk, consistent with our vote on the same award in 2018."

"While we appreciate the significant value generated under Mr Musk's leadership since the grant date in 2018, we remain concerned about the total size of the award, the structure given the performance triggers, dilution, and lack of mitigation of key person risk," it added in the statement on its website. "We will continue dialogue with Tesla on this and other topics."

This is the latest snub to Musk's payout following the recommendation last month by shareholder advisories ISS and Glass Lewis to vote against it.

The multibillion award was first proposed in 2018, as referenced by NBIM. Under the terms, Musk was set to earn nothing from his Tesla toil unless the car maker'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 was to be granted a $56 billion payday, though that figure is now nearer $46 billion as a result of Tesla's stock being the worst performer on the S&P500 in calendar 2024 to date, down around 28 percent.

Even before this, a Delaware Court of Chancery scotched the compensation in January, agreeing with a shareholder that believed the package was excessive. A judge ruled the award was illegally approved, citing Musk's close links with the board and his considerable influence over Tesla.

In April, Tesla urged shareholders to reinstate the eye-watering compensation deal, and put in on the agenda for Thursday's meeting.

New York City's Comptroller and seven financial firms said in May that shareholders should not approve the package.

Last week, Tesla board chair Robyn Denholm wrote to investors urging them to ratify the payout, warning that Musk could walk if it is shot down again.

"Fairness and respect require that we honor the collective commitment we made to Elon – a commitment that was, and fundamentally still is, about retaining Elon's attention and motivating him to focus on achieving astonishing growth for our company," Denholm wrote.

"Elon's unique contributions have built Tesla from a company that was, in 2018, a loss-making, ambitious company with significant hurdles and challenges to overcome into what it is today – a company that is literally changing the world by driving so many critical initiatives that are making our planet more sustainable while at the same time delivering hundreds of billions of dollars of value to all of you who invested in Tesla's dream. These contributions should be respected."

"We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018. Elon is not a typical executive, and Tesla is not a typical company. So, the typical way in which companies compensate key executives is not going to drive results for Tesla.

She added: "Motivating someone like Elon requires something different. This is one of the key reasons the Award also requires Elon to hold any shares he receives upon 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 stockholders."

The direction of travel among some sizable shareholders is obvious, but would Musk really quit if he doesn't get his hands on those greenbacks?

Let us know what you think in the comments below. ®

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