Norway's Wealth Fund Opposes Musk's $1tn Tesla Pay Package

The world’s largest sovereign wealth fund, Norway’s national fund, has announced it plans to vote against an astonishing $1 trillion (£765 billion) pay package proposed for Tesla’s CEO, Elon Musk. While acknowledging the significant value generated during Musk's tenure, the fund expressed concerns regarding the overall size of the compensation, potential dilution of shares, and the absence of measures to mitigate key person risks associated with executive pay.

The fund, known as Norges Bank Investment Management, stated, “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.” In light of these reservations, it aims to maintain an open dialogue with Tesla regarding this and other important issues.

This announcement comes just two days ahead of Tesla’s annual shareholder meeting, where investors will cast votes on Musk's unprecedented performance award. If approved, the deal could position Elon Musk as the first trillionaire in history.

The pay package is linked to Musk’s ability to escalate Tesla’s market value from approximately $1 trillion to an astonishing $8.5 trillion over the next decade. Should he achieve this goal, Musk’s ownership stake in the company would increase significantly from nearly 16% to over 25%, propelling his net worth beyond $2 trillion.

Robyn Denholm, Tesla’s chair, has emphasized the importance of retaining Musk as the chief executive. In a letter addressed to shareholders, she warned that the company could lose “significant value” if Musk were to depart. This sentiment underscores the high stakes involved in the shareholder vote.

Last year, the Norwegian fund opposed what was then the largest pay package in U.S. corporate history—valued at $56 billion for Musk. Although shareholders approved this deal in June, it faced setbacks, being rejected for the second time by a Delaware court in December.

In a notable incident, Nicolai Tangen, the CEO of the Norwegian fund, extended a dinner invitation to Musk in Oslo last year. However, following the fund's vote against Musk's previous pay package, he declined the invitation. A text exchange between the two was made public through a freedom of information request by the Norwegian business outlet DN. Musk reportedly texted Tangen in October, stating: “When I ask you for a favour which I very rarely do, and you decline, then you should not ask me for one until you’ve done something above nothing to make amends. Friends are as friends do.”

Shareholder sentiment regarding the new pay deal appears mixed. Influential advisory groups such as Glass Lewis and ISS have recommended that investors reject the $1 trillion compensation package. Additionally, several major pension funds, including the American Federation of Teachers and the California Public Employees’ Retirement System—the largest public pension fund in the U.S.—have voiced their opposition.

Elon Musk, Tesla's largest individual shareholder, holds the power to vote on this pay proposal. Recently, he expressed his views on social media platform X, 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.” This comment illustrates his commitment to Tesla’s unique position in the market and his intentions regarding leadership.

The upcoming vote on Elon Musk's $1 trillion pay package is not just a reflection of his extraordinary contributions to Tesla, but also a pivotal moment that could significantly influence the company’s future. As stakeholders weigh the implications of the proposed compensation against the backdrop of executive pay controversies, the decision made at the shareholder meeting could resonate throughout the energy and technology sectors for years to come.