Norway Wealth Fund Rejects Elon Musk Trillion Dollar Tesla Pay Deal

The Norway Government Pension Fund Global, the world’s largest sovereign wealth fund, has announced its opposition to Tesla’s proposed remuneration package for chief executive Elon Musk, a deal that could ultimately grant him shares worth up to one trillion dollars. This decision signals growing concern among major institutional investors regarding executive compensation and governance at some of the world’s largest companies.

Norges Bank Investment Management, which oversees the fund’s £1.47 trillion in assets and holds a significant 1.17 per cent stake in Tesla valued at 17 billion dollars, stated that it does not believe the pay award aligns with its views on responsible executive pay. The operator highlighted worries about the sheer size of the proposed award, the dilution effects for existing shareholders, and the absence of safeguards to reduce key person risk.

The Norwegian fund has previously opposed a similar high-value pay deal for Musk, having voted against a 56 billion dollar compensation plan proposed in 2018. That package was subsequently struck down by a Delaware judge as an ‘unfathomable sum’ and unfair to shareholders, leading Musk to relocate Tesla’s legal home from Delaware to Texas after a brief falling out with the fund’s chief executive.

As part of its stance, Norges Bank also indicated it would reject Tesla’s planned employee stock compensation scheme and vote against two of the three directors seeking re-election, offering support only to Joe Gebbia. Supporters of the pay proposal, such as Baron Capital, remain in the minority, while the company’s largest shareholders – BlackRock, Vanguard, and State Street – have yet to declare their intentions.

The Tesla board maintains that securing Musk’s commitment is vital to the company’s future, warning that he may depart should the deal fail. The pay package lays out ambitious milestones for Musk to achieve, including Tesla attaining a market value of 8.5 trillion dollars, almost six times its current value. Under current plans, Musk could receive up to 878 billion dollars in shares after accounting for the cost at the time of the award, according to estimates by Reuters.

Musk’s potential increased voting power has also been cited as an incentive for him to prioritise Tesla operations. Retaining him is regarded as critical in the face of intensifying competition for top technology and artificial intelligence talent. One provision would require Musk to hold a senior leadership role for a decade to access the full award.

These remuneration deliberations come as Tesla faces notable sales declines in several international markets, with significant drops reported across Scandinavia and a decrease in electric vehicle sales in China. Tesla’s shares reflected this uncertainty, falling by over five per cent at the close in New York.