Tesla CEO Elon Musk at the Saudi-U.S. Investment Forum, Riyadh, Saudi Arabia, May 13, 2025.
Hamad I Mohammed | Reuters
Norway’s $2 trillion sovereign wealth fund, the world’s largest, has thrown a wrench into Tesla’s upcoming shareholder meeting by announcing its opposition to Elon Musk’s proposed trillion-dollar pay package. Norges Bank Investment Management (NBIM), a significant shareholder in Tesla, revealed Tuesday that it had already voted against the compensation plan, setting the stage for a contentious debate this week.
The move by NBIM, known for its long-term, value-oriented investment strategy, underscores growing concerns about the governance implications of Musk’s compensation. “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’s managers emphasized their commitment to ongoing dialogue with Tesla on this and other governance topics.
Tesla shares reacted to the news, trading 2.4% lower in premarket activity. The market’s response reflects the potential uncertainty surrounding Musk’s future role and influence at the company, particularly if the pay package is rejected. The proposed compensation plan not only grants Musk potentially $1 trillion in stock options but also expands his voting power within the company. This expanded control, coupled with the sheer size of the award, has raised red flags among some investors and governance experts.
The Tesla Board of Directors is advocating for the approval of a pay plan contingent on Tesla achieving ambitious milestones over the next decade. However, critics argue that the plan’s structure could incentivize short-term gains at the expense of long-term sustainability. Moreover, the dilution effect of such a massive stock grant could negatively impact existing shareholders. The outcome of the shareholder vote will be a crucial test of investor confidence in Musk’s leadership and the company’s long-term vision. Beyond the financial implications, the vote could have broader ramifications for executive compensation practices and shareholder activism in the tech industry.
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