Norway’s $1.7 trillion sovereign wealth fund has announced that it plans to vote against ratifying Tesla CEO Elon Musk’s $56 billion pay package. This decision comes after a Delaware judge invalidated the controversial package earlier this year. As the eighth-largest shareholder in Tesla, the fund’s decision carries significant weight in the upcoming shareholder vote. While the fund acknowledges the value generated under Musk’s leadership since the grant date in 2018, it remains concerned about the total size of the award, the performance triggers, dilution, and the lack of mitigation of key person risk.
This is not the first time that the Norwegian wealth fund has taken a stand against excessive CEO pay. In 2018, the fund also voted against Musk’s pay package. Furthermore, last year, the fund voted against more than half of U.S. CEO pay packages above $20 million, citing concerns that they did not align with long-term value creation for shareholders. The fund’s track record of disapproval towards exorbitant executive compensation demonstrates its commitment to representing the best interests of shareholders.
Support for Labor Rights and Collective Bargaining
In addition to its stance on Musk’s pay package, the fund has expressed support for labor rights and collective bargaining within Tesla. The fund has backed a shareholder proposal calling on Tesla to adopt a freedom of association and collective bargaining policy, aligning with the interests of labor unions seeking to assert their influence over the U.S. carmaker. This support for labor rights comes amidst industrial action in Sweden, where Tesla’s mechanics have been on strike since October 27th, marking one of the country’s longest labor disputes.
Controversy Surrounding Tesla’s Corporate Decisions
The backlash facing Tesla in the Nordic region extends beyond labor disputes to concerns over corporate governance. The company has faced criticism from unions and pension funds for its refusal to accept demands for collective bargaining rights for Swedish mechanics. Additionally, the wealth fund’s vote to transfer Tesla’s state of incorporation to Texas from Delaware, following the invalidation of Musk’s pay package by a Delaware judge, further highlights the controversy surrounding the company’s corporate decisions.
With Tesla shareholders set to vote on Musk’s pay package and the re-election of directors, including Musk’s brother, at the upcoming annual meeting on June 13th, the outcome of the vote could have significant implications for the company’s future. The decision of Norway’s sovereign wealth fund to vote against Musk’s pay package underscores growing concerns over executive compensation, corporate governance, and labor rights within Tesla. As shareholders weigh in on these critical issues, the outcome of the vote will shape the direction that Tesla takes in the coming years.
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