Top managers, pension funds split vote for Elon Musk's $56 billion pay package

U.S. and international pension funds and other asset owners mostly voted against Elon Musk's $55.8 billion pay package at electric carmaker Tesla, but other large institutional investors supported it — and Musk prevailed.

Norges Bank Investment Management, which runs the assets of Norway's sovereign wealth fund — the 17.7 trillion Norwegian kronor ($1.65 trillion) Government Pension Fund Global, Oslo — voted against the pay package for Tesla's CEO at the shareholder meeting June 13 in Austin, Texas.

NBIM said it would not comment beyond the vote rationale published on its website: "Norges Bank Investment Management voted against a Tesla Inc. proposal to ratify performance-based stock options to Elon Musk, consistent with our vote on the same award in 2018. While we appreciate the significant value generated under Mr. Musk's leadership since the grant date in 2018, we remain concerned about the total size of the award, the structure given performance triggers, dilution and lack of mitigation of key person risk. We will continue to seek constructive dialogue with Tesla on this and other topics."

One of the larger pension funds to support Musk's pay package was the Florida State Board of Administration, Tallahassee, which manages $254 billion in state assets, including the $193.2 billion Florida Retirement System Pension Plan and holds 2.9 million Tesla shares.

The proposal to ratify an award of stock options worth up to $55.8 billion passed with about 72% of votes cast in favor, Tesla said in a regulatory filing June 14. That’s roughly 1 percentage point shy of the support Musk received when the company first proposed the pay package in 2018, according to Bloomberg.

Meanwhile, the company's largest outside shareholder, Vanguard Group, voted for Musk's pay package. Vanguard holds a 7.2% stake in the company, according to regulatory filings. BlackRock is the next largest outside shareholder with 5.9%. It's unclear how BlackRock voted, and the firm declined to comment.

Vanguard had voted against Musk's compensation package when it was first approved by shareholders in 2018. But "given the strong alignment of executive pay with shareholder returns since 2018 and the benefits the board asserted related to the motivational value for the CEO in preserving the original deal," Vanguard-advised funds voted for the ratification at Tesla's annual meeting, according to a note to investors.

The note was made available June 14 on Vanguard's website to the manager's more than 50 million investors. Vanguard had 232 million Tesla shares as of March 31, second only to the 13% stake held by Musk.

CalPERS, CalSTRS not onboard

America's largest public pension fund, the $499.7 billion California Public Employees’ Retirement System, Sacramento, voted against the pay package.

CalPERS was joined by a number of other asset owners that own Tesla shares to oppose it, including the $332.5 billion California State Teachers' Retirement System, West Sacramento; New York City Comptroller Brad Lander, who serves as the custodian and a trustee for the New York City Retirement Systems, which consist of five pension funds with $264.3 billion in total assets; $46 billion National Employment Savings Trust, London; $43 billion Railpen, London; $20 billion AkademikerPension, Gentofte, Denmark; $1 billion faith-based endowment United Church Funds, New York; and proxy adviser Shareholder Association for Research & Education.

CalPERS CEO Marcie Frost told a June 12 board meeting: “I want to clearly state for the record, that we did not support the CEO compensation package when it was first approved by shareholders back in 2018, and we will not support it this year.”

CalPERS owns nearly 9.2 million Tesla shares.

Other pension funds that voted against the pay package included North Carolina Treasurer Dale Folwell, who oversees the $121.7 billion North Carolina Retirement Systems, Raleigh; Oregon Investment Council, which oversees the $93.6 billion Oregon Public Employees Retirement System, Tigard; and the $63.3 billion Tennessee Consolidated Retirement System, Nashville. Spokespeople for all confirmed the votes but declined to provide further comment.