A primary reason for Norway’s sovereign wealth fund’s “no” vote on Elon Musk’s $1 trillion pay package is the “dilution” it would inflict on other shareholders.
The fund, Tesla’s seventh-largest shareholder, announced its opposition ahead of the annual meeting. If the package passes and targets are met, Musk would receive new shares pushing his stake from 16% to over 25%, thereby diluting the equity of all other investors.
In its statement, the fund said it was “concerned about the total size of the award, dilution and lack of mitigation of key person risk.”
This concern for fellow shareholders pits the fund against the Tesla board. Chair Robyn Denholm argues that the real harm to shareholders would be Musk’s departure, which she warns would cause a “significant value” loss.
The fund’s “no” vote, alongside rejections from CalPERS and advisory firms ISS and Glass Lewis, highlights a deep divide over how best to protect shareholder value.