Norway’s central bank investment management company (Norges Bank Investment Management) announced on Tuesday (November 4th) that it has voted against Tesla CEO Elon Musk’s $1 trillion compensation plan and rejected Tesla’s 2.59% share dilution proposal, making it the first major investor to publicly voice its stance.
The institution manages Norway’s $1.9 trillion sovereign wealth fund, which is the world’s largest sovereign wealth fund.
According to FactSet data, the Norwegian sovereign wealth fund holds a 1.2% stake in Tesla, making it the sixth-largest institutional investor in the company. Musk is Tesla’s largest shareholder, owning about 15% of the voting rights.
In a statement, the institution said, “While we recognize Mr. Musk’s significant value creation for the company with his visionary leadership, we have concerns regarding the total reward amount, share dilution, and key person risk given our position on executive compensation.”
The statement also mentioned, “We will continue to engage in constructive dialogue with Tesla on this issue and other topics.”
Last year, the sovereign fund voted against Musk receiving a $560 billion compensation plan, which at the time set a record for the highest in U.S. corporate history. The plan was later revoked by a Delaware judge. Despite the judge’s decision to revoke the compensation plan, it was still approved by 72% of the votes. Tesla is currently awaiting a ruling from the Delaware Supreme Court on its appeal.
During pre-market trading on Tuesday, Tesla’s stock price fell by nearly 3%.
Tesla is set to hold its annual shareholder meeting on Thursday, where the results of several proposals, including Musk’s compensation plan, will be announced.
The proposed plan stipulates that if Musk can increase the company’s valuation to $8.5 trillion within the next decade, nearly eight times the current valuation, his ownership stake will increase by an additional 12%, with the value of the incentive plan slightly exceeding $1 trillion.
Small public pension funds like the American Federation of Teachers and various New York City retirement systems, along with major shareholder advisory firms Institutional Shareholder Services and Glass Lewis, have also publicly opposed the compensation plan.
Several large pension funds have also issued public statements opposing the compensation plan, stating that the board’s “strong efforts” to retain the CEO have damaged Tesla’s reputation and led to excessive compensation.
Tesla Chairman Robyn Denholm sees this vote as crucial for retaining Musk. Musk has publicly stated that if shareholders reject his compensation plan again, he will leave the company.
Denholm told the Financial Times last month that Musk’s departure “would not be good for shareholders.” However, she emphasized that even if Musk loses the vote, she does not believe he would take “sudden and damaging” actions.
(This article references a report from The Wall Street Journal)