Norway’s $2 trillion sovereign wealth fund, the largest of its kind globally, has announced its decision to vote against Tesla CEO Elon Musk’s proposed $1 trillion pay package. This decision comes ahead of Tesla’s annual shareholder meeting scheduled for this week, where the contentious compensation plan is expected to be a major point of debate.
Key Reasons for the Rejection
The fund, managed by Norges Bank Investment Management (NBIM), holds a significant 1.14% stake in Tesla, valued at $11.6 billion. Despite acknowledging Musk’s transformative leadership at Tesla, NBIM expressed concerns over the size of the award, shareholder dilution, and the lack of safeguards against key person risk. In a statement, NBIM stated:
“While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk—consistent with our views on executive compensation.”
The fund has emphasized its intention to engage in constructive dialogue with Tesla on executive compensation and other governance issues.
Details of the Proposed Pay Package
Tesla’s Board of Directors has proposed a pay package for Musk that could eventually see him granted nearly $1 trillion in stock. The plan ties the full award to Tesla achieving specific milestones over the next decade, which would also expand Musk’s voting powers within the company.
Critics, however, have raised concerns about the scale of the package and its implications for Tesla’s governance. Notably, the Take Back Tesla campaign, a coalition of unions and corporate watchdogs, has urged shareholders to reject the deal. Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis have also recommended shareholders vote against the proposal.
Musk’s Response to Opposition
Elon Musk has not taken the criticism lightly. In a recent analyst call, Musk referred to ISS and Glass Lewis as “corporate terrorists.” On the social media platform X (formerly Twitter), Musk defended the pay plan, stating:
“Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me.”
Musk has also hinted that he may step down as CEO if the deal is rejected, raising concerns about Tesla’s future leadership.
A History of Clashes
This is not the first time NBIM has opposed Musk’s compensation. Last year, the Norwegian fund voted against Musk’s $56 billion pay package, which was ultimately approved by Tesla shareholders. That package remains the largest public executive compensation plan in U.S. history.
Reports also suggest that Musk has had personal disagreements with NBIM Chief Executive Nicolai Tangen. After NBIM’s opposition to his previous pay package, text messages revealed Musk declining an invitation to a dinner in Oslo, reportedly stating:
“When I ask you for a favor, which I very rarely do, and you decline, then you should not ask me for one until you’ve done something to make amends. Friends are as friends do.”
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