Syed Imran Haider 
Last week, the sovereign wealth fund of Norway announced its decision to vote against ratifying pay package put forward by Tesla CEO Elon Musk worth $56 billion. The fund is valued at $1.7 trillion.
The pay package in question is scheduled for a shareholder vote in the coming week. Earlier this year, it had already been invalidated by a judge in Delaware.
According to data from LSEG, the wealth fund of Norway is the eighth biggest shareholder of the US-based car maker.
The objection
Back in 2018, approval had been granted for Musk’s pay package. It is the largest for a CEO in corporate America. But, a judge had voided the package earlier this year, saying that it was unfair to the shareholders.
According to the fund, there is no doubt that significant value was generated under the leadership of Elon Musk since 2018.
However, Norges Bank Investment Management (NBIM), the fund’s operator said that their biggest concern was the total size of the package.
It said that the package did not mitigate key person risk and there was also dilution and performance triggers to think about. The fund had not been in favor of the package in 2018 as well.
NBIM added that they would continue to opt for constructive dialog regarding this matter and others too.
According to fund data, it holds a stake of 0.98%, which is valued at $7.7 billion. Excessive CEO pay is one of the biggest concerns of the fund.
Musk’s response
Musk responded to a post on X and said that the decision of the wealth fund was ‘not cool’. He added that a look at the constituents would show that most were in favor of the package.
The fund had voted against more than half of the CEO pay packages last year in the United States. These packages had a value of more than $20 million.
It warned that these pay packages cannot create long-term value for shareholders.
The fund said that it would support a shareholder proposal aimed at pushing Tesla to adopt a collective bargaining and freedom of association policy.
This would certainly be helpful for labor unions that wish to use their influence on the US car manufacturer.
Unions
This vote comes at a time when the company is already dealing with industrial action in Sweden. Since October 27th, the mechanics have been on strike.
This makes it one of the longest labor disputes in the country. In 2022, Norway’s wealth fund had supported another shareholder proposal.
This one called on Tesla to respect labor rights, including collective bargaining and freedom of association. The wealth fund owns about 1.5% of the listed stocks in the world.
The EV car maker has received a lot of backlash from some pension funds and unions in the Nordic region.
This is because the company refuses to accept the Swedish mechanics’ demand for collective bargaining rights that include wages and other conditions.
After a Delaware judge invalidated his pay package, Musk moved to transfer the state of incorporation of the company to Texas.
