Today's Edition
OSLO / BOSTON (REUTERS)
Norway's sovereign wealth fund, Tesla's sixth-largest outside investor, said on Tuesday it would vote against ratifying a proposed pay deal for CEO Elon Musk potentially worth $1 trillion.
Musk's pay package is still seen as likely to win, given broad investor support in the past and the backing Tesla enjoys from its large retail shareholder base. Laws in Texas, where Tesla moved its headquarters last year, allow Musk to vote his own large stake, giving him 15.3% of voting power including restricted stock granted in August.
The opposition from stewardship-minded Norges Bank Investment Management adds uncertainty to the outcome of a ballot set for Thursday, corporate governance experts said, and underscore how other European investors may also turn against the electric-vehicle maker.
Tesla did not immediately respond to a request for comment. Tesla's board is pushing for shareholders to approve the plan, with Chair Robyn Denholm warning that Musk could leave the $1.5 trillion market cap firm if the deal is rejected.
With a 1.12% stake in Tesla, the Norwegian firm known as NBIM is the only one of Tesla's top-10 outside investors to disclose its voting intentions ahead of the meeting so far.
After NBIM, the next-largest investor to give its voting intentions is Baron Capital, which plans to back Musk's pay package and has 0.39% of Tesla's shares. Tesla's largest institutional investors, including BlackRock, Vanguard, and State Street, have yet to disclose their intentions.
Among other large European investors in Tesla, representatives for Legal & General Investment Management of London and Amundi Asset Management of Paris declined to comment. Each has about 0.6% of Tesla shares.
Proxy advisers ISS and Glass Lewis have both urged shareholders to reject Musk's compensation plan, arguing it would be too large, deliver high payouts even if the CEO only meets some goals and could dilute the holdings of other investors. Both also opposed a re-ratification vote last year on a 2018 $56 billion package for Musk.
"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 - consistent with our views on executive compensation," NBIM said on its website. NBIM also voted "no" on Musk's previous compensation plan.
Tesla's sales in Norway fell 50% in October, along with declines in some other European markets.
NBIM, which runs $2.1 trillion, also said it would vote against Tesla's proposed general stock compensation plan, which is intended for all employees and can also be used by the board to benefit Musk.
Tesla says its CEO would earn "nothing" unless the company's market value grows substantially and that the maximum award is only paid if the group reaches several milestones, most notably a market value of $8.5 trillion, a near six-fold increase.
