Trillion-Dollar Tesla Shareholder Will Vote Against Musk’s $56 Billion Pay Package

By: Stephanie Bontorin | Published: Jun 10, 2024

Tesla shareholders will vote on Thursday during the company’s annual meeting on whether to approve Elon Musk’s proposed $56 billion pay package as CEO.

Unfortunately, it seems that Musk will face opposition from Norges Bank Investment Management and two other major proxy advisor firms that hold a collective majority of Tesla shares. Sources say Norway’s sovereign wealth fund will oppose the gargantuan pay day.

What is Norway's Sovereign Wealth Fund?

Norges Bank Investment Management operates Norway’s sovereign wealth fund, which is valued at $1.7 trillion and is the eighth largest Tesla shareholder.

A three story building with a green statue in front

Source: @ReutersBiz/X

The fund uses proceeds from the country’s lucrative oil and gas industry to secure pensions for residents of Norway. As public servants, the group works to secure the best return on their investments. In the case of Tesla, a major payout for Musk will not be in the best interest of the shareholders.

Norges Bank Issues a Statement on the Controversy

Norges Bank issued a statement on the controversy: “While we appreciate the significant value generated under Mr. Musk’s leadership since the grant date in 2018, we remain concerned about the total size of the award, the structure given performance triggers, dilution, and lack of mitigation of key person risk.”

An exterior of a large building with a small square and statues in front

Source: @DailyCompoundng/X

CEO pay can greatly affect the payout that shareholders receive. High executive bonuses are extracted from overall revenue, leaving a small piece of the pie for big companies that have invested funds into the company and expect a payout.

Tesla Execs Backing up Musk’s Worth

Tesla executives politely retaliated against the Norway investment group to try to sway their vote. Robyn Denholm, chairperson of the Tesla Board of Directors, wrote a letter to shareholders asking for “reciprocal respect.”

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Source: @C_S_Skeptic/X

The Australian business executive also wrote that Musk has “no shortage of ideas and other places he can make an incredible difference in the world.”

Corporate Greed Cuts Into Shareholder Profits

Aside from the internal team at Tesla, it seems that many shareholders have taken issue with Musk’s billion-dollar salary over the past few years. This year’s annual meeting is not the first time that the Norwegian wealth fund has brought up issues with Musk’s personal evaluation.

Elon Musk surrounded by a group of attendees at an outdoor event, wearing a dark blazer and blue shirt, looking slightly to the side with a serious expression

Source: Wikimedia Commons

In 2022, Nicolai Tangen, the Norwegian wealth fund’s chief executive, said in a statement to the Financial Times: “We are seeing corporate greed reaching a level that we haven’t seen before and it’s really becoming very costly for shareholders in terms of dilution.”

A Judge Previously Overturned Musk's Wild Pay Package

During the annual meeting in 2018, shareholders approved Musk’s pay deal. However, a judge in Delaware struck down the deal.

Elon Musk seen with a microphone.

Source: Tesla Owners Club Belgium/Wikimedia Commons

Court records show that the judge disallowed the pay out to Musk based on the “unfathomable sum.” The final decision in court allowed the board to reapprove the payday after accusing Tesla’s directors of breaching their fiduciary duties to shareholders by awarding Musk a $50 billion-plus payday.


What Responsibility Does a Board of Directors Have?

The judge presiding over the Delaware case slammed the board of directors for being frivolous with money and potentially causing financial strain on the company.

Four men wearing suits and ties in an office looking at paperwork.

Source: Sebastian Herrmann/Unsplash

A board of directors for a large company is responsible for ensuring money is being spent wisely. If one CEO takes out too much money in bonuses or salaries, the company can struggle to pay its bills, or investors may withdraw, taking funding with them.


Paying a CEO Excessively Can Hurt Shareholder Value

CEO pay can be high for any number of reasons. The higher the wage of the entrepreneur, the more likely they are to grow the business.

Elon Musk seen amid a blue background.


However, at a certain point, CEO pay can harm a company’s lifespan. According to the Kenan Institute, large CEO paydays can harm employee morale and drive away shareholders and investors who feel like they are getting shorted.


Two Other Big Investors Are Against the Pay Package

In the past month, two other large firms have recommended voting against Musk’s CEO package.

Elon Musk sits in front of a vivid blue background wearing a black sport coat while clasping his hands together

Source: Apu Gomes/Getty Images

The Institutional Shareholder Service (ISS) and Glass Lewis (which together control a majority of the proxy advisory market for mutual funds) have both come out in opposition to the vote.


Denholm Agrees That Musk Does Not Need the Money

Although Denholm agrees that Musk does not require a pay boost, she still thinks paying out an obscene amount of money to one of the world’s richest men is a good idea.

A woman getting into the backseat of a car

Source: @SawyerMerritt/X

On Musk’s massive wealth, Denholm said: “This is obviously not about the money. We all know Elon is one of the wealthiest people on the planet, and he would remain so even if Tesla were to renege on the commitment we made in 2018.”


EV Sales Have Been Down in Recent Months

Although Tesla set a sales record of more than 1.8 million electric vehicles sold in 2023, the overall EV market has been shrinking.

Exterior view of a Tesla building

Source: Adobe Stock

Some countries are more excited about the prospect of a totally electric fleet than others, but overall, EV sales have remained stagnant at 26%, and many American states are abandoning electric car sales goals for the future.


Musk Has Been Reportedly Focusing More Energy and Finances on His Other Companies

Investors recently accused Musk of diverting financial resources to his other businesses. Social media platform X (formerly Twitter), SpaceX, and his AI startup xAI have allegedly been getting most of his attention in recent months.

A close up of the side of the SpaceX hanger building

Source: Wikimedia Commons

Some of his internal moves at Tesla have also been unfavourable, both by the public and shareholders. In April, Musk fired his entire Supercharger team of around 500 employees which was immediately criticized by investors and partners.