Unlock the Editor’s Digest for free with a selection of Roula Khalaf’s favorite stories in this weekly newsletter. One of the top stories featured is the world’s largest sovereign wealth fund announcing its plans to vote against Elon Musk’s $56 billion pay award at Tesla. This decision comes as the massive remuneration package, the largest in US corporate history, faces intense scrutiny from shareholders.
Norway’s $1.7 trillion oil fund, the eighth largest shareholder in Tesla, expressed its concerns about the size, structure, and the failure to mitigate “key person risk” in Musk’s pay package. The fund, which owns about 1% of Tesla, worth approximately $8 billion, had previously voted against the pay package in 2018 and maintained its stance. ISS and Glass Lewis, the two major proxy advisers, have also recommended that shareholders reject Musk’s pay package.
The oil fund has been taking a more active stance against excessive pay packages, particularly in the US, voting against more than half of all awards exceeding $20 million. Last year, it opposed pay deals at major companies like Apple, Google’s Alphabet, and LVMH. CEO Nicolai Tangen highlighted the rising corporate greed that is becoming costly for shareholders due to dilution.
Despite its concerns, the Norwegian fund expressed appreciation for the significant value generated under Musk’s leadership. It plans to engage in constructive dialogue with Tesla on pay-related and other topics. The fund will support Tesla’s move from Delaware to Texas, a decision prompted by Musk’s dissatisfaction with the judge’s ruling on the pay package. The controversial pay award was granted in 2018 when Tesla was grappling with production challenges.
In addition to voting against Musk’s pay package, the Norwegian fund will support a shareholder proposal advocating for trade union rights, which Tesla opposes. The company has been embroiled in a dispute with trade unions in Sweden over its reluctance to recognize collective bargaining. Tesla has defended the pay award, citing over $735 billion in value creation and expressing confidence in shareholder support for the deal approved in 2018.
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