OSLO, Nov 4 (Reuters) – Norway’s sovereign wealth fund, the world’s largest, announced on Tuesday that it plans to vote against CEO Elon Musk’s proposed Tesla (TSLA.O) compensation package, which could be worth up to $1 trillion in stock, at the company’s annual general meeting this week. Shareholders will decide on November 6 whether to approve the plan, potentially the largest CEO pay package in history, which critics have labeled excessive. USA
So far, the Norwegian fund is the largest external investor to reveal its voting stance. Baron Capital, the next-largest to announce, said on Monday that it will support Musk’s package. Tesla’s major institutional investors, including BlackRock, Vanguard, and State Street, have yet to disclose their intentions.
Balancing Value Creation and Oversized Compensation
Tesla’s board is urging shareholders to approve the plan. Chair Robyn Denholm warned last week that Musk might leave the company if the package is rejected. Although the total stock award could reach $1 trillion over ten years, its current cost would reduce Musk’s potential value to about $878 billion, according to Reuters analysis.
“While we recognize the significant value created under Mr. Musk’s visionary leadership, we are concerned about the total size of the award, potential dilution, and lack of mitigation for key-person risk,” Norges Bank Investment Management stated on its website. The fund, Tesla’s seventh-largest shareholder with a 1.12% stake valued at $17 billion, also opposed Musk’s previous pay plan, prompting a sharp response from the CEO.
Various groups have previously tried to block record payouts to Musk, including a $56 billion compensation plan in 2018 that investors eventually reapproved last year, though legal challenges remain.
Board Votes and Employee Stock Plans
The Norwegian fund also said it would vote against two of three Tesla directors up for reelection, opposing Kathleen Wilson-Thompson and Ira Ehrenpreis while supporting Joe Gebbia, who joined the board in 2022. In addition, the $2.1 trillion fund plans to vote against Tesla’s general stock compensation plan, which covers all employees and can be used to benefit Musk.
Tesla maintains that Musk earns “nothing” unless the company’s market value grows significantly. Maximum payout is contingent on reaching milestones, including a market value of $8.5 trillion—a nearly sixfold increase. Experts note that Musk could still earn tens of billions of dollars without meeting all the targets.
Political and ESG Pressure
Top U.S. investment firms face political pressure from Republican leaders to deprioritize environmental, social, and governance (ESG) concerns in their votes, and Musk has been an ally of former President Donald Trump. Analysts say this makes independent voting difficult for large institutional investors.
“At this point, large investors almost can’t vote against management,” said Matt Moscardi, CEO of director analytics firm Free Float Analytics.
