Norway's Sovereign Wealth Fund to Vote Against Elon Musk's $1 Trillion Tesla Pay Package

Norway's $2 trillion sovereign wealth fund, one of the world's largest institutional investors, announced Tuesday that it would vote against the proposed $1 trillion pay package for Tesla CEO Elon Musk.

Norges Bank Investment Management (NBIM), which manages the massive fund and holds a significant stake in the electric car manufacturer, stated that it had already cast its vote ahead of the company's annual shareholder meeting scheduled for Thursday.

The decision by NBIM, which is the seventh-biggest single shareholder in Tesla with a stake valued at approximately $17 billion, represents a major institutional rejection of the unprecedented compensation deal. The fund's opposition comes despite management guidance supporting the package and reported threats from Mr. Musk that he might step down if the deal is rejected by investors.

In a statement detailing its position, NBIM acknowledged the value created under the CEO's tenure but expressed fundamental concerns regarding the structure and scale of the award.

"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," NBIM stated. The fund added that it intends to continue seeking constructive dialogue with Tesla on this and other topics.

Concerns Over Compensation Scale

The proposed incentive package is one of the largest in corporate history and could potentially make Mr. Musk the world's first trillionaire if Tesla achieves a valuation of $8.5 trillion over the next decade, up from its current valuation of roughly $1 trillion.

The Norwegian fund's opposition is rooted in its long-standing principles regarding executive pay, which emphasize aligning compensation with long-term shareholder interests while avoiding excessive awards that lead to significant dilution.

The vote on Thursday will determine the fate of the performance-based award, which has been a contentious issue among investors. The package was initially approved by shareholders several years ago but was later voided by a Delaware court earlier this year, which ruled that the board had failed to prove the deal was fair to shareholders. Tesla's board is now seeking shareholder re-approval of the deal.

NBIM's decision to vote against the package adds substantial weight to the opposition, given the fund's global influence and its role as a benchmark for responsible investing. The fund, which manages the proceeds of Norway's oil and gas revenues, is the largest national wealth fund globally.

The outcome of Thursday's vote remains uncertain, but the public rejection by a major institutional investor like NBIM signals significant resistance to the scale of the proposed compensation.