CORRECTION: In an earlier version of this case, news wrote that Musk will be paid NOK 477 billion. The right thing is that he gets options. Options are something that gives him the opportunity to buy Tesla shares at a price that has been agreed in advance. At 23.10 on Thursday evening, it became clear that the shareholders approve a salary package for Musk of NOK 477 billion. It is one of the issues shareholders in Tesla voted on during the company’s general meeting. Legal relocation from Delaware to Texas was also approved. The main character himself went on stage a few minutes after the result was clear on Monday evening Norwegian time. There he praised the shareholders who had just approved his salary package. – Fantastic. I love you dive. We have the most amazing shareholder base,” Musk said. The Norwegian Oil Fund had already announced that they would vote no to the wage package, because they believe the package is disproportionately large. – Does he need 500 billion? The Norwegian pension fund Oljefondet is the eighth largest owner in his company. They voted against giving Musk this giant salary, because they think it takes too much of their value as owners. – This salary package for Musk takes executive salaries to historic, or should we say astronomical, new heights. We voted against because we think it is not in the interests of the shareholders to have such large transfers of value from the owners and to the manager, says Carine Smith Ihenacho, director of ownership in the Oil Fund. CRITICAL: Carine Smith Ihenacho, director of ownership at the Oil Fund. Photo: Ksenia Novikova / news Musk stopped following oil fund manager Nicolai Tangen after it became known that the Oil Fund voted no. But the Oil Fund is not afraid of offending the world’s richest man, says Ihenacho. – When we vote on pay packages and vote in general, we do so according to clear guidelines and regardless of what the individual leader thinks about it, and completely regardless of how Elon Musk would react. She adds that they are “very happy about the value increase that has taken place in Tesla under Elon Musk”. – It has been absolutely fantastic. But does he need NOK 500 billion to create these values? We don’t think so. One of those who completely disagree is businessman and billionaire Christian Ringnes. DISAGREEMENT: Christian Ringnes believes that Musk will take everything he gets. Photo: Håkon Mosvold Larsen / NTB – Does he mean this? – Yes, definitely. So this is not salary in that sense. He gets the right to buy shares at a cheap price, and that price is sky-high, much higher than it was when this agreement was entered into. He gave up all his salary for many years, this was the package he was supposed to have. And nobody actually thought that this package would be successful, says Ringnes. He emphasizes that Musk has created enormous value for the shareholders of Tesla. – He deserves everything he gets. This is a man who changes the world, says Ringnes. Elon Musk at a test tunnel at the Boring Company in Hawthorn south of Los Angeles in December 2018 Photo: by Robyn Beck / AFP / NTB The case has also been before the judiciary in the USA once. There will probably be several rounds. But what is this case – and all this money – actually about? Lawsuit and trial It all started in 2018. Then the general meeting in Tesla had approved a salary package for Musk.. Reuters describes the package as follows: Musk was to receive shares worth approximately one percent of Tesla’s equity each time they reached one of several goals the company had set. The shareholder Richard Tornetta did not like that. He thought it was unfair that Musk should get so much money. He therefore sued Musk and several other directors at Tesla. Tesla has made Elon Musk both rich and famous. Here he is during a launch of Tesla model Y in Shanghai in 2020. Photo: Aly Song / Reuters For a while, the package had an assumed value of approximately 56 billion US dollars, or a staggering 594 billion Norwegian kroner, according to the news agency. Now the package is “only” worth 45 billion dollars, or around 477 billion Norwegian kroner, according to the New York Times. The general meeting of Tesla approved the package. Nevertheless, Musk did not receive any money, because the case is still up in the courts in Delaware in the USA. Elon Musk drew in court in Delaware in November 2022. Photo: Elizabeth Williams / AP / NTB There the judge put his foot down. Judge Kathaleen McCormick declared the pay package invalid. She thought the sum was “unfathomable” and not fair to the shareholders. She also believed that Musk had largely determined the terms of the package himself, because the board consisted, among other things, of his brother and close friends, write the New York Times. Another attempt But the battle is not over, because the verdict is the duck. Now the general meeting has also voted on the proposal once more. This time it was expected to be very jammed. Several shareholders had flagged their position, including the Oil Fund. They voted against, something they did in 2018. Storebrand has also decided to do that, says portfolio manager Ivar Harstveit in the Delphi fund. – There must be a limit to how extensive pay packages should be, he says, but also underlines that he believes it is right to pay key personnel for their efforts. He described the sum as unusually high, even for the United States. – The salary level for top managers in the USA is already significantly higher than the salary level for Norwegian top managers. This is quickly 100 times that again, so we are talking about huge sums, says Harstveit. – Should be investigated in an ethics committee Bjørn Espen Eckbo is professor of financial economics at Dartmouth College (USA) and professor II at the Norwegian School of Economics’ Department of Finance. Photo: Lokman Ghorbani / news Professor of financial economics, Bjørn Espen Eckbo, strongly disagrees with the oil fund’s flagging that they will vote no. – Then they do not follow up on the contract they themselves have helped to enter into. As a shareholder, you, together with all other shareholders, are responsible for paying the bill. Then you should not afterwards, when you have delivered so clearly, try not to pay, he says to news. Eckbo thinks the Oil Fund’s no is unethical. – I think the ethical basis for that decision is so bad that it should be investigated by the Storting’s ethics committee, whose task is to assess the ethics of the Oil Fund’s behaviour, says the professor – The Fund has spent years building up a good reputation. With a stroke of the pen, you can actually destroy such a reputation, he adds. Not unreasonable The professor does not think it is unreasonable that Musk gets the package of 45 billion dollars. – It’s a lot of money, but it’s the value creation you have to focus on. He has created an enormous amount of money. And then he has received a total of five percent of that added value. Five percent is not so abnormal in itself, but the numbers are quite serious, he says. Elon Musk at a technology conference in Paris last June. Photo: Gonzalo Fuentes / Reuters/ NTB Eckbo points out that when the agreement was concluded, it was almost impossible to achieve the return requirement. If Musk had not succeeded, the deal would not have been worth anything. – No one thought he would make it. He still took the job, and managed it in buckets and buckets. One of the most important principles in corporate governance is to pay for what you enter into, he underlines. – I would say it was good that the shareholders repeated the vote they took in 2018, says Eckbo about the result. – An unreasonably large pay package In a report CBS has gained access to, it is stated that the pay package may lead to Tesla shares becoming less valuable. There is still no clear answer to what it will mean for the shareholders, Harstveit believes. – If Elon Musk does a good job as CEO, in the sense that he gets the profit in Tesla to increase so that the share price increases, it will be good for the shareholders. At the same time, that does not mean that it is right to have an unreasonably large salary package, he says. Musk had more or less established in advance that he would be supported by the general meeting. That’s what CBS writes. – Both resolutions are expected to pass by a good margin! he wrote on X/Twitter on Wednesday evening. Published 13.06.2024, at 22.03 Updated 14.06.2024, at 09.12
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Shareholders agreed to Musk salary package of 477.5 billion – news Urix – Foreign news and documentaries
