Tesla shareholders are voting this week on whether to award CEO Elon Musk a new pay package potentially worth up to $1 trillion over a decade, with some prominent investors in the electric car maker criticizing the compensation plan.
Norway’s sovereign wealth fund, which holds a stake in Tesla, on Tuesday said it would vote against the pay package.
“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,” said Norges Bank Investment Management, which manages the country’s government pension fund.
The fund has a 1.16% stake in Tesla, the sixth-largest holding among institutional investors.
Another investor, Baron Capital Management, said Monday that it would vote in favor of the package.
Musk “has built one of the most important companies in the world,” wrote Ron Baron, founder of the asset management firm. “He’s redefining transportation, energy and humanoid robotics and creating lasting value for shareholders while doing it. His interests are completely aligned with investors.”
Musk is the world’s richest person, with Bloomberg estimating his wealth at $477 billion.
Tesla’s board of directors introduced the proposed pay package in early September. Musk, who controls nearly 16% of Tesla’s outstanding shares, would also receive more voting power under the plan. In a Sept. 5 regulatory filing, the board described the proposed compensation package as an “ambitious plan to retain and incentivize Mr. Musk through the issuance of a highly customized, performance-based restricted stock award.”
Tesla would be required to hit certain financial and operational milestones for Musk to earn the full pay package. Those include the company reaching a market capitalization of at least $8.5 trillion; delivering 20 million vehicles; producing 1 million self-driving “robotaxis”; and manufacturing 1 million of the company’s humanoid robots, dubbed Optimus, which are currently under development.
Robyn Denholm, chairperson of the Tesla board, warned investors last week that Musk could leave the company if shareholders reject the enhanced pay proposal.
“If we fail to foster an environment that motivates Elon to achieve great things through an equitable pay-for-performance plan, we run the risk that he gives up his executive position, and Tesla may lose his time, talent and vision, which have been essential to delivering extraordinary shareholder returns,” Denholm wrote in a letter to shareholders posted on social media.
Edited by
The Associated Press
contributed to this report.
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