Norway’s $1.7 trillion sovereign wealth fund has announced its decision to vote against ratifying Tesla CEO Elon Musk’s $56 billion pay package. This decision comes after a Delaware judge invalidated the pay package earlier this year. The fund, which is Tesla’s eighth-biggest shareholder, cited concerns about the total size of the award, the structure given performance triggers, dilution, and the lack of mitigation of key person risk as reasons for its decision.
In 2018, Norway’s wealth fund had already voted against Musk’s pay package. The fund has been critical of excessive CEO pay and last year it voted against more than half of U.S. CEO pay packages above $20 million, warning that they did not align with long-term value creation for shareholders.
In addition to voting against Musk’s pay package, the sovereign wealth fund also stated that it would vote for a shareholder proposal calling on Tesla to adopt a freedom of association and collective bargaining policy. This move is seen as a win for labor unions seeking to assert their influence over the U.S. carmaker. Tesla has been facing industrial action in Sweden, with its mechanics on strike since October 27, in one of the country’s longest labor disputes.
Tesla has been facing backlash in the Nordic region from unions and some pension funds over its refusal to accept the demand from its Swedish mechanics for collective bargaining rights covering wages and other conditions. It is clear that there is growing pressure on Tesla to address labor rights issues within the company.
The wealth fund also voted in favor of transferring Tesla’s state of incorporation to Texas from Delaware, a move that Musk sought after the Delaware judge invalidated his pay. Additionally, the fund expressed its support for a proposal to elect Musk’s younger brother Kimbal to Tesla’s board of directors. This is not the first time the fund has supported Kimbal’s election, having done so in 2018.
Tesla shareholders are set to vote on Musk’s pay package, as well as the re-election of directors, including Musk’s brother, at their annual meeting scheduled on June 13. It remains to be seen how the outcome of the vote will impact Tesla’s future decisions regarding executive compensation and labor rights.
The controversy surrounding Tesla CEO Elon Musk’s pay package highlights the growing scrutiny of executive compensation practices and labor rights within the corporate world. Norway’s sovereign wealth fund’s decision to vote against Musk’s pay package sends a strong message about the need for transparency, fairness, and accountability in corporate governance. As Tesla continues to navigate these challenges, it will be important for the company to address the concerns raised by shareholders and stakeholders to ensure its long-term success and sustainability.
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