According to Reuters, Tesla’s sixth largest external shareholder, the Norwegian sovereign wealth fund, announced on Tuesday that it will vote against a potential $1 trillion compensation package designed for CEO Elon Musk.
However, analysts still believe that Musk’s compensation plan is highly likely to pass, due to the widespread support from investors in the past and Tesla’s strong support among a large group of retail shareholders. Tesla relocated its headquarters to Texas last year, where local laws allow Musk to vote with his own large shares, giving him 15.3% of the voting rights (including restricted stock granted in August).
The opposition from the “responsible investment” oriented Norges Bank Investment Management (NBIM) is not surprising, but it directly criticized the compensation plan and announced opposition to the re-election of two Tesla directors, increasing the uncertainty of the upcoming vote on Thursday. Corporate governance experts point out that this move highlights the possibility that other European investors may also lean towards the opposition camp.
The board warns that if the plan is rejected, Musk may resign
The company’s board of directors is pushing for shareholder approval of the plan, and board chairman Robyn Denholm has warned that if the compensation plan is rejected, Musk may leave the $1.5 trillion company.
Francis Byrd, a partner at consulting firm Alchemy Strategies Partners, stated that “due to the widespread emphasis on ESG (Environmental, Social, and Corporate Governance) principles among European investors, they are more likely to be influenced by the voting direction of Norwegian sovereign funds. ”
Bird and several other advisors believe that Tesla’s proposal will ultimately win at the conference, as major investors still support Musk to this day. NBIM holds 1.12% of Tesla’s shares and is currently the only top ten external shareholders with a public voting intention.
Experts also pointed out that under pressure from the Trump administration, large institutional investors in the United States have reduced their public pressure on companies. This means that it may be difficult for the outside world to determine the actual level of opposition before the meeting is held.
Karla Bos, an independent governance consultant in Arizona, said, “The key word for 2025 is’ uncertainty, ‘especially for complex voting like Tesla
Jiaxin will support Musk’s compensation plan
Following NBIM, Schwab Asset Management is the next major shareholder to publicly vote. A spokesperson for Jiaxin told Reuters via email on Tuesday that they will support Musk’s performance reward plan, believing that it “helps align management with shareholder interests.
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