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Elon Musk Gets His $2.6 Billion Tesla Payout Plan, and SWFs are Not Excited About it

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Patient and optimistic Tesla shareholders approved an ostensibly performance-based compensation package worth an unprecedented US$ 2.6 billion for CEO Elon Musk on March 21, 2018, but not all of the electric car maker’s investors were happy about bestowing such largess. Norges Bank Investment Management (NBIM) and the California State Teachers’ Retirement System (CalSTRS) were among those who voiced their opposition to the measure, which passed with just 73% of votes cast in its favor, excluding votes made by Musk and his brother Kimbal. Most remuneration proposals for chief executives at similarly sized U.S. companies pass with 95% shareholder approval. However, technology-innovative companies with celebrity-like CEOs and having a founder still lead the enterprise are factors that typically permit such actions when it comes to compensation. The company’s shareholders are patient, hoping for an Amazon-like future. In 2017, Tesla burned through US$ 3.5 billion in cash.

Norway Sovereign Wealth Fund

Norges Bank Investment Management – which currently ranks among Tesla’s top 20 institutional shareholders with a 0.47% stake worth US$ 243 million) – did not provide an official explanation for its opposition to the payout. Norges Bank Investment Management oversees Norway Government Pension Fund Global. But Norway’s US$ 1 trillion sovereign wealth fund made its position on excessive executive pay abundantly clear in a paper on the topic published last April, in which it states its belief that compensation for CEOs should be capped and settled in cash or locked-in shares on an annual basis, and that is aligned with both long-term value creation and shareholders’ interests.

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Japan’s GPIF Awards Nissay Asset Management with ESG Disclosure Mandate

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Increasingly asset owners across the Asia-Pacific region are studying the impacts of environmental, social, and governance factors on listed companies. As more Japanese pensions augment asset allocation to listed equities, the importance of corporate non-financial disclosures and practices becomes clear. These disclosures can have a material impression on company stock prices. In addition, Japanʼs Stewardship Code and Corporate Governance Code in 2014 and 2015 were launched, respectively. These codes helped the (environmental, social, and governance) ESG concept gain momentum in Japan.

Japan’s Government Pension Investment Fund (GPIF), the largest public pension fund in the world, awarded a research mandate to Nissay Asset Management Corporation. The mandate entails studying ESG disclosures. The study will conduct a comparable analysis on ESG standards and practices, while taking into account input from both investors and companies. With around US$ 110.5 billion in assets under management, Nissay Asset Management is owned by Japanese life insurance giant Nippon Life Insurance Company.

As GPIF boosted its allocation to domestic equities, the asset owner took a deeper look into the impact of ESG on equity investing. GPIF is keen on improving efficiencies in Japan’s capital markets. GPIF is a universal owner of stocks, similar in some aspects to what Norway’s Government Pension Fund Global (GPFG) does.

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Norges Bank Real Estate Management Buys Central Paris Property

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Norges Bank Real Estate Management, the real estate unit of Norges Bank Investment Management (oversees Norway Global Pension Fund Global), has signed an agreement to acquire a 100 percent interest in an office property located on 54-56 rue la Boétie in central Paris.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Schlumberger Gets Closer to Eurasia Drilling Company

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Russia’s sovereign wealth fund, the Russian Direct Investment Fund, and American oilfield services giant Schlumberger (SLB) have planned a deal to invest in Russia’s Eurasia Drilling Company Limited. RDIF CEO Kirill Dmitriev made the announcement. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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