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Saturday, July 20, 2024

Musk loses some respect in Norway

UPDATED: He used to be the darling of both government- and business leaders in Norway, but Tesla founder and billionaire Elon Musk has steadily been losing his appeal and even angered former supporters. His aversion to organized labour has long been criticized, he’s run into opposition from Norway’s huge sovereign wealth fund, and many are no longer proud to be driving one of his Teslas.

Elon Musk and Norwegian Prime Minister Jonas Gahr Støre got on well during a meeting in Stavanger just two years ago. Now the smiles have faded, after Musk, in Støre’s view, has refused to acknowledge or accept collective bargaining agreements. PHOTO: Statsministerens kontor/Erik Krafft

Norway’s so-called “Oil Fund,” the world’s largest sovereign wealth fund, was among major investors voting last week against Musk’s demand for an earlier-agreed compensation package from Tesla currently valued at around USD 47 billion. Musk ended up winning it from a majority of shareholders, thousands of whom are Norwegians who still backed a compensation agreement for Musk from 2018.

“He succeeded (on delivering sky-high growth and results) and Musk deserves the pay package,” one small shareholder, Jon Erik Nordskog from Skien, told Norwegian business news service E24 after Thursday’s voting. “An agreement is an agreement.” Nordskog, among 11,000 Tesla shareholders in Norway, noted that Musk had faith in his company and was willing to take on huge risks. “He could have ended up with nothing,” Nordskog told E24 in a story also published over the weekend in newspaper Aftenposten. Instead, the value of Tesla rose from around USD 58 billion in 2018 to as much as 20 times that in 2021, before falling back. Nordskog remains among those sitting on a solid unrealized gain on his own Tesla shares.

The sheer amount of money involved now, however, has sent criticism over high executive pay in Norway to entirely new levels, and prompted Oil Fund managers in Oslo to balk. The equivalent of nearly NOK 500 billion in the form of stock option compensation to Musk alone was just too much for the world’s largest sovereign wealth fund to swallow. It ranks as the eighth-largest investor in Tesla, and had already warned before Tesla’s annual shareholders meeting on Thursday that it would vote against the amount of compensation sought by Musk.

“While we appreciate the significant value generated under Mr Musk’s leadership since the grant date (of stock options) 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,” wrote Norges Bank Investment Management (NBIM, which manages the Oil Fund) in its stated rationale for voting against the “performance-based stock options to Elon Musk.” NBIM further wrote that it would “continue to seek constructive dialogue with Tesla on this and other topics.”

Tesla founder Elon Musk in conversation with former Norwegian Transport Minister Ketil Solvik-Olsen in Oslo eight years ago. Musk thanked Norwegian officials for providing the incentives that have made electric cars so popular and prevalent in Norway. They’ve also made him even wealthier in the process. PHOTO: Samferdselsdepartementet

The Oil Fund believed the compensation claim from Musk would simply claim too much of the value held by Tesla’s other owners. “The pay package for Musk takes executive pay to historic, or we can say astronomic, new heights,” Carine Smith Ihenacho, chief governance and compliance officer at NBIM, told Norwegian Broadcasting (NRK). “We voted against because we didn’t think it was in the shareholders’ interests for such value transfer from all the owners to the leader.”

CalPERS, the US state of California’s enormous pension fund, was among large investors also voting against the package, prompting Musk to question its honour. Musk also reacted negatively to Norway’s “no,” if not as harshly. He claimed it wasn’t “cool” and he also stopped following the Oil Fund’s leader, Nicolai Tangen, on social media. Tangen is another very wealthy man after an earlier career running hedgefunds and has been criticized for seemingly courting Musk on previous occasions. Ihenacho said the Oil Fund isn’t afraid of offending Musk, who’s often referred to as the world’s richest man.

Oil Fund boss Nicolai Tangen had earlier this year managed to chat with Elon Musk on his podcast, during which Musk again thanked Norway for paving the way for more electric car sales in Norway. The podcast was marred by technical difficulties, though, and relations have now soured after the Oil Fund voted against Musk’s compensation package. PHOTO: NBIM

“When we vote for pay packages, or vote in general, we do it after clear guidelines and independently of what individual leaders think about it,” she said, adding that the Oil Fund’s “no” vote was made “completely independent of how Elon Musk would react.” The Oil Fund has also voted against a large pay package for the leader of Adidas that was worth around NOK 100 million.

Ihenacho added that the fund is very happy over how the value of Tesla has grown under Elon Musk, despite recent declines in earnings and share price. Tesla Norge itself logged more record results in 2023 and paid out more than NOK 600 million in dividends. The company’s growth and earnings have been “fantastic,” Ihenacho said, “but does anyone need NOK 500 billion to create these values? We don’t think so.”

It was the latest round of opposition Musk has faced in Norway, which greatly contributed to Tesla’s success after the country started offering large tax incentives for the purchase of electric vehicles more than a decade ago. Musk has remained grateful for the boost Norway also gave to Tesla car sales, and he’s visited Norway many times. He’s been warmly welcomed by government officials at both ends of the political spectrum and seemed to almost develop a cult following among Tesla buyers and other fans.

Musk won fans on both ends of the political spectrum in Norway, here with former Conservative Prime Minister Erna Solberg at a conference on “green restructuring” in 2016. PHOTO: Statsministerens kontor

Last fall, however, Tesla workers in Sweden launched a lengthy strike after failing to win company support for a collective bargaining agreement. Tesla had already faced major labour conflicts in the US and by last Christmas, trade union federation unhappiness with Tesla spread throughout the Nordic region.

It didn’t take long for Norwegian trade union federation Fellesforbundet and the seafarers’ organization Sjømannsforbundet to warn of protests in sympathy with their Swedish colleagues. They included slowdowns or blockades at harbours, while union leaders and eventually the Norwegian Parliament demanded meetings with Tesla’s local management. The leader of Tesla Norge had declared that all of their employees were free to organize. The problem was that any demands for collective bargaining agreements would not be recognized. Tesla, reportedly under orders from Musk, would not enter into any wage pacts.

Unhappy prime minister
The Norwegian Parliament tried once again to call in local Tesla bosses last winter, to no avail, and then even Prime Minister Jonas Gahr Støre of the Labour party lost patience. Newspaper Dagsavisen reported in February how Støre had responded on the floor of Parliament to a question from the far left Reds Party: “Would he send a clear message to Tesla that it must follow the Norwegian and Nordic models for relations between employers and employees?”

“The answer to that is short: Yes,” responded Støre “We want orderly working conditions in Norway. We want workers to have the right to organize and the right to a collective bargaining agreement. I’m aware that my party in Parliament has asked Tesla representatives to come and clarify their position.” Støre called the concern for Tesla workers in Sweden “a good indication of Nordic solidarity.”

Tesla has recently accounted for fully 20 percent of all car sales in Norway, which has boasted one of the largest markets in the world for electric cars. Sales have since slipped, also after various technical trouble over the years. PHOTO: El-bil forening

Støre had met with Tusk before the labour conflict broke out in Sweden. In a new meeting, Støre said he would raise the positive aspects of an organized workforce, claiming it’s “largely been very profitable for companies. It doesn’t limit business owners’ efforts to reap good results, it strengthens them.”

There’s been no meeting, and no one from Tesla has visited Parliament. Local Tesla boss Axel Tangen has mostly limited his response to a written statement to newspaper Dagens Næringsliv (DN) last December, in which he claimed that workers were free to organize but regardless of what they decide, it wouldn’t have any consequences for their employment status. Tesla also contends the freedom to organize shows that Tesla meets terms of the Norwegian model, adding that Tesla has no “global policy” against organized labour.

As the labour conflicts continued, DN reported that Norwegian labour regulators opted to examine Tesla’s working environment. They ended up criticizing the company over its work schedules, allegedly poor training and even some health considerations involving how chemicals are handled. Tesla objected, claiming all workers had shifts from 8am to 4pm. Not so, argued regulators. Then came a rash of critical commentaries in Norwegian media.

It’s all a far cry from the hero’s welcome Musk enjoyed in Norway in earlier years. He also started getting lots of competition from cheaper and subsidized Chinese electric cars, and a few weeks ago, various large construction projects in the Oslo area have kicked electric cars out of special lanes free of tolls on motorways into town. Many Tesla owners have sold their Teslas, also because of disputes over service or a lack thereof.

“This has all clearly made us think twice about driving a Tesla,” Tuva Moflag, a Member of Parliament for the Labour Party, told news service FriFagbevegelse. Even though 25,000 new Teslas hit the roads in Norway alone last year, striking Tesla mechanics and controvery over Musk’s pay package have left prospective buyers with second thoughts now.

The Oil Fund’s leader, Nicolai Tangen, clearly has some too. He had planned to invite Musk back to Norway next year, to speak at an investment conference and enjoy “a cool dinner” featuring reindeer. After refusing to support Musk’s own enormous compensation package, though, Tangen isn’t sure whether Musk would show up.

DN reported last week that Tangen himself was confronted at another conference in Oslo over whether public confidence in his own position might suffer if he’s viewed as a “buddy” of “such a controversial figure as Elon Musk.”

“If we were buddies before, we aren’t now,” replied Tangen, with a sense of humour. Berglund



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