The Norwegian Sovereign Wealth Fund publicly opposes Elon Musk's exorbitant compensation plan on the eve of Tesla, Inc.'s shareholder meeting.

As the ninth largest shareholder of Tesla, Inc. (TSLA.US), the Norwegian Sovereign Wealth Fund voted against the unprecedented $100 billion compensation package offered to its CEO, Elon Musk. This is the strongest signal of opposition from one of Tesla, Inc.'s major shareholders. As of the time of writing, Tesla, Inc.'s pre-market stock in the United States fell over 2% on Tuesday. The Norwegian Sovereign Wealth Fund, operated by the Norwegian Central Bank Investment Management Company (NBIM), stated on its official website: "While we recognize that Musk has created immense value for the company with his vision and insight, we have concerns about the overall size of this reward scheme, dilution effects, and the lack of key person risk mitigation measures." It is reported that the Norwegian Sovereign Wealth Fund had previously voted against Musk's compensation package. The scheme was reapproved by shareholders in June last year but was later ruled invalid by the Delaware court. While Tesla, Inc.'s board of directors appealed, they also redesigned a new compensation plan for Musk. Additionally, the fund also opposed shareholder proposals for Tesla, Inc. to invest in Musk's AI startup company xAI, and opposed the reappointment of Ira Ehrenpreis and Kathleen Wilson-Thompson as members of Tesla, Inc.'s board. The fund supports Joe Gebbia, co-founder of Airbnb, Inc. Class A, in his re-election as a director. In explaining the reasons for voting against the reappointment of the two directors, the fund wrote: "When the board fails to act in the best interests of shareholders, shareholders should have the right to seek adjustments to the board." The fund did not specify the reasons for its opposition to Tesla, Inc.'s investment in xAI or explain the reasons for supporting Gebbia's reappointment. Tesla, Inc.'s shareholder meeting is approaching Tesla, Inc. will hold its annual shareholder meeting on November 6th, where a vote will be taken on a compensation package of up to $100 billion proposed in September. The compensation package shows that if Musk achieves a series of performance targets, he will receive stock awards of up to $100 billion. These targets include: Tesla, Inc. achieving a market value of $8.5 trillion, selling 12 million cars, delivering 1 million humanoid Siasun Robot & Automation units, deploying 1 million autonomous robotaxis, and increasing adjusted profits from $16.6 billion in 2024 to $400 billion. If approved, this will be the largest compensation package in corporate history. Furthermore, if the compensation package is approved, Musk's stake in Tesla, Inc. will increase from 13% to nearly 29%, giving him greater control. However, this compensation proposal has drawn criticism from proxy advisory firms such as ISS. ISS has urged investors to vote against it, citing that the scheme is excessively large and lacks effective restraints. Meanwhile, Tesla, Inc.'s chairman Robyn Denholm warned in a letter to shareholders last week that if Musk's $100 billion compensation package is not approved, the CEO may leave Tesla, Inc. Denholm called on shareholders to support the compensation package and urged investors to re-elect three senior directors who work closely with Musk. She stated that this performance-based compensation plan aims to retain and motivate Musk, allowing him to lead Tesla, Inc. for at least another seven and a half years. Denholm pointed out that as Tesla, Inc. strives to become a leader in global AI and autonomous driving technology, Musk's role is crucial. She added that Musk's leadership is "critical" to Tesla, Inc.'s success and warned that without a plan that effectively motivates Musk, the company may lose his "time, talent, and vision." Denholm also stated: "He has long insisted that he should have sufficient voting power in Tesla, Inc. in the future to prevent AI-related disasters. Therefore, the core of this compensation package is not money, but the influence of voting rights." It is worth mentioning that Tesla, Inc.'s board of directors has been criticized in recent years for being too closely tied to Musk and for not adequately safeguarding shareholder interests. Governance experts and advocacy groups have raised questions about its independence and oversight of Musk's influence. Earlier this year, the Delaware court overturned Musk's 2018 compensation agreement, ruling that it was improper and negotiated by directors lacking independence.