Will Elon Musk get a salary package of NOK 477 billion? That is the question shareholders in Tesla will vote on on Thursday evening, during the company’s general meeting. The Norwegian Oil Fund has already announced that they will vote no, because they believe the package is disproportionately large. 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. At that time the general meeting in Tesla had approved a salary package for the founder. Reuters described 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 will also vote on the proposal once more. This time it is expected to be very jammed. Several shareholders have already flagged their position, including the Oil Fund. They will vote 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 Professor of financial economics, Bjørn Espen Eckbo, strongly disagrees with the oil fund’s flagging that they will vote no. 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 – 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 is paid the package of 45 million 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. – 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. Although the meeting will not take place until late Thursday evening Norwegian time, Musk has already more or less established that he will 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
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Shareholders in Tesla will vote on whether Elon Musk will receive a payment of NOK 477.5 billion – news Urix – Foreign news and documentaries
