Hey everybody, welcome back to the Elon Musk Podcast. This is a show where we discuss the critical crossroads, the Shape, SpaceX, Tesla X, The Boring Company, and Neuralink. I'm your host Will Walden, Tesla's 8th largest shareholder. Norway's $1.7 trillion sovereign wealth fund announced on Saturday that it will vote against ratifying Elon Musk's $56 billion pay package. The decision is part of a broader shareholder vote scheduled for next week.
Now. The Norwegian fund, which holds a .98% stake in Tesla valued at $7.7 billion, has been a vocal critic of excessive CEO compensation. Now, Norwich Bank Investment Management, or NBIM, which manages the fund, acknowledges the significant value created under Musk's leadership since 2018, but expressed concerns about the pay packages, total size, the structure dilution and the lack of mitigation of key person risk, they said. We will continue to see constructive dialogue with Tesla
on this and other topics. Additionally, the fund plans to support a shareholder proposal urging Tesla to adopt a policy of freedom of association and collective bargaining, signaling support for labor unions seeking influence over the automaker. Now, the original pay package approved in 2018 was invalidated early this year by a Delaware judge who deemed the amount
unfair to shareholders. Judge Kathleen McCormick of the Delaware Court of Chancery described the compensation as an unfathomable sum and criticized Tesla's board for failing to disclose adequately the close relationships between the approving directors and Musk. Now the package, reportedly the largest ever for ACEO of a publicly traded company, came under scrutiny for its excessive size and the ease with which Tesla could achieve the performance benchmarks tied to
Musk's compensation. The Norwegian sovereign wealth fund also voted against the package in 2018 and has consistently opposed high CEO pay packages that do not align with long term shareholder value. Now, if approved, Musk's compensation would remain the largest for a chief executive in the United States.
Now, Tesla's board of directors has urged shareholders to reaffirm the package, which includes no salary or cash bonus, but offer stock options contingent on Tesla's market value rising to $650 billion / 10 years from 2018. Tesla is currently valued at approximately $571.6 billion. Now, in a recent interview with Financial Times, Tesla board chair Robin Denholm defended the package, stating that Musk's deserves the pay due to the company's impressive revenue and
stock price targets being met. However, proxy advisory firm Glass Lewis has advised shareholders to reject the package, citing its excessive size and the potential negative impact of Musk exercising his stock options. Glenn Lewis also highlighted Musk's numerous other ventures, which includes serving as chief technology officer and executive chairman at X or Twitter, CEO of SpaceX, founder of Neurolink and the Boring Company, and CEO of artificial intelligence firm
XAI. These roles, the firm argued, could detract from his focus on Tesla. Musk has been Tesla's CEO since 2008 and has played a crucial role in transforming the company into the most valuable automaker by market capitalization. Under his leadership, Tesla reversed a $2.2 billion loss in 2018 to achieve a $15 billion profit and increase vehicle production sevenfold, according
to the Vote Tesla campaign. And despite Tesla's accomplishments, the company is facing some challenges, including a decline in sales volume reported in the first quarter of this year, the first such decline in nearly four years. This decline comes amid waning consumer interest in EVs, and as the vote approaches, Musk and his supporters, including Robin Denholm, are working to persuade shareholders to reauthorize the 2018 P package.
The main argument centers around the premise that the original deal should be honored, billionaire investor Ron Barron said on CNBC. We said as Tesla as a company, Elon, if you perform, this is what you're going to get. How can you go back and renege on that, especially when all of the directors and all the shareholders approved it?
It's crazy. Similarly, investor Kathy Wood took to Twitter, expressing how can shareholders renege on his pay package after Elon and shareholders already have taken and overcome the risks associated with Tesla's rise to producing the top selling car in the world. However, not all influential voices are in favor. Marcy Frost, head of the California Public Employees Retirement System, stated the pension manager would vote against the package, deeming it not commensurate with Tesla's
performance. Musk responded by accusing CalPERS of breaking the deal, stating shame on them, they have no honor and beyond. Tesla Musket faced criticism of legal battles over his management practices at Twitter and other ventures. After acquiring Twitter in 2022, Musk fired senior leaders, depriving them of severance payments intended to stabilize the company during the
transition. And these former Twitter execs, including Prague Grawell, have since sued Musk, claiming he has failed to honor financial commitments, and the lawsuit condemns. Under Musk's control, Twitter has become a scofflaw, stifling employees, landlords, vendors and others. And Musk's approach to financial commitments has also been controversial. In March, a Silicon Valley bakery complained about a canceled Tesla order for 4000 pies, to which Musk responded by
promising to resolve the issue. And he wanted to make sure everything was right and dependable. Historical disputes over employee composition at Tesla further complicate Musk's narrative. 2009 Tesla Co founder sued the company after being pushed out in denied stock options. More recently, Jerome Jalen left Tesla in 2021 under contentious circumstances regarded unvested
shares. Now, despite the issues, Musk has significantly contributed Tesla's success, achieving milestones that seemed improbable to outsiders. However, as the vote nears, the question remains whether shareholders will uphold the pay package or deem it excessive in light of Musk's other commitments and the company's challenges. Hey, thank you so much for listening today. I really do appreciate your
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