Norway’s oil fund to vote against Musk’s $56bn Tesla pay award

The world’s largest sovereign wealth fund has said it will vote against Elon Musk’s $56bn pay award at Tesla, as the biggest remuneration package in US corporate history comes under intense shareholder scrutiny.

Norway’s $1.7tn oil fund, the eighth largest shareholder in Tesla, said on Saturday that it was “concerned” about the size of the pay package, its structure and how it fails to mitigate “key person risk”.

Tesla shareholders will vote on the award on Thursday, after a judge in Delaware struck it down in January, calling it “an unfathomable sum”.

The Norwegian fund owns about 1 per cent of Tesla, worth about $8bn at the end of 2023. It voted against the pay package when it was first proposed in 2018, and said its stance had not changed.

Both ISS and Glass Lewis, the two largest proxy advisers, have also recommended shareholders reject Musk’s pay package.

The oil fund has taken an increasingly active line against pay packages, particularly in the US, where it has voted against more than half of all awards of more than $20mn. Last year, it voted against pay deals at some of its biggest holdings including Apple, Google owner Alphabet and LVMH.

“We are seeing corporate greed reaching a level that we haven’t seen before and it’s really becoming very costly for shareholders in terms of dilution,” Nicolai Tangen, the fund’s chief executive, said in 2022.

The Norwegian fund said it would “seek constructive dialogue with Tesla on [pay] and other topics”, and that it appreciated “the significant value generated under Mr Musk’s leadership”.

It said it would vote in favour of Tesla moving its incorporation from Delaware to Texas, a move that was proposed as a result of Musk’s fury at the judge’s pay decision.

The pay package — which was subject to Musk increasing Tesla’s share price significantly — was awarded in 2018 when the electric carmaker was struggling to produce vehicles at scale.

The Norwegian fund also said it would vote in favour of a shareholder proposal backing trade union rights, which Tesla opposes. Tesla is embroiled in a bitter and long-lasting fight with trade unions in Sweden over its refusal to recognise collective bargaining in the Scandinavian country.

Tesla has previously said that the pay award has driven “more than $735bn in value creation” and expressed confidence that its shareholders would “honour the deal they approved in 2018”.