URGENT UPDATE: Norway’s sovereign wealth fund, managing a staggering $1.6 trillion, is set to vote against a controversial compensation package for Tesla CEO Elon Musk that could grant him up to $1 trillion over the next decade. This announcement comes just days ahead of Tesla’s annual shareholder meeting scheduled for Thursday, where over a dozen proposals, including Musk’s massive payout, will be on the ballot.
The fund, known as Norges Bank Investment Management, which holds a 1.16% stake in Tesla, expressed concerns regarding the “total size of the award” and the risk of dilution. In a statement, they emphasized the need for better alignment with their views on executive compensation, saying, “While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk.”
As the sixth-largest institutional investor in Tesla, the Norwegian fund is advocating for a more balanced approach to compensation, underscoring the importance of sustainable practices and accountability in executive roles.
In stark contrast, Baron Capital Management, which owns approximately 0.4% of Tesla shares, announced its support for Musk’s pay package. Founder Ron Baron praised Musk’s leadership, asserting, “Elon is the ultimate ‘key man’ of key man risk. Without his relentless drive and uncompromising standards, there would be no Tesla.” Baron emphasized Musk’s transformative impact on industries, stating that he is “redefining transportation, energy, and humanoid robotics.”
Tesla’s management proposed granting Musk up to 12% of the company’s shares through 12 separate tranches, contingent on meeting ambitious milestones related to car production, share price, and operating profit. This unprecedented pay structure has sparked heated debates among investors and analysts, with significant implications for Tesla’s future governance and financial health.
The impending vote highlights the growing tension between major investors over executive compensation and reflects broader concerns within the investment community regarding corporate governance standards. As Tesla continues to grow, the outcome of this vote could set a precedent for how executive compensation is structured across the industry.
As developments unfold, all eyes will be on Tesla’s annual shareholder meeting. Will Musk’s record-setting pay package move forward, or will the concerns raised by Norway’s wealth fund lead to a reconsideration of this monumental deal? Stay tuned for updates as this story develops.
