Musk's $1 trillion gigabonus gets no support from Norwegian sovereign wealth fund
The Nordic sovereign wealth fund, the world's largest, said on Tuesday it would not agree to Musk's compensation.
“While we appreciate the significant value that Mr. Musk's visionary role creates, we have concerns about the overall size of the compensation, the dilution and the lack of risk controls for key executives (...),” the sovereign wealth fund wrote in a statement.
NBIM holds a 1.12 percent stake in Tesla, worth approximately $17 billion. This makes it the company's seventh-largest shareholder.
It's unclear whether the largest investors, including BlackRock, Vanguard, and State Street, will approve the bonus. Another Tesla shareholder, Baron Capital, announced Monday that it supports the CEO's compensation.
Ten-year planMusk wants to further increase his stake in Tesla through a ten-year plan . The goal is to eventually own an additional 12 percent of the shares, worth approximately $1 trillion. Musk will have to pay for the shares, bringing the remaining stake to $878 billion, according to Reuters.
After ten years, Musk would own 29 percent of the shares. As part of the plan, he must ensure, among other things, that Tesla's value rises to $8.5 billion. Currently, the company is worth approximately $1.4 billion.
“The bottom line is that Elon will only be rewarded when he delivers exceptional performance that benefits all Tesla shareholders,” Tesla Chairman Robyn Denholm wrote in a letter to shareholders shared by the company in late October on the messaging service X , also owned by Musk.
In the same letter, the CEO attempted to convince Tesla shareholders to approve Musk's bonus. She also warned that the CEO might leave the company if he didn't receive the compensation.
Criticism of the enormous compensation isn't limited to the Norwegian sovereign wealth fund. According to Reuters, critics believe Musk, as the largest shareholder, has sufficient incentive to stay with the company. They also fear the plan could exacerbate share dilution.
This means that current investors are seeing a decline in the value per share because new shares are being issued. The remuneration could also pose risks to management, according to the critics the news agency reports on.
Experts warned the New York Times that the plan also gives the board of directors the freedom to grant a portion of the shares to Musk, even if he doesn't meet his targets. The board includes his brother and several longtime friends and business partners.
This isn't the first time Tesla's CEO has requested a higher salary. In early 2024, a judge struck down a $56 billion compensation package from 2018. In June of that year, a majority of shareholders again voted in favor of the compensation package.
Many shareholders considered the bonus necessary to ensure Musk's retention at Tesla. Nevertheless, at the end of 2024, a judge blocked the bonus for the second time. The ruling found the package flawed and unfair to shareholders.
Even richerMeanwhile, the world's richest man is getting richer. In early August, Musk received a block of shares. This amounted to 96 million Tesla shares. At the stock price at the time (around $302 per share), this stake was worth approximately $29 billion, roughly €25 billion. According to Tesla, the bonus was necessary to keep Musk at the company. This bonus increased Musk's stake in Tesla to around 16 percent.
RTL Nieuws
