A major institutional investor has announced its intention to vote against a proposed trillion-dollar compensation package for Tesla’s CEO at the company’s upcoming annual meeting.
Norges Bank Investment Management, which manages the world’s largest sovereign wealth fund and is a top-ten shareholder in the electric vehicle manufacturer, stated it will oppose the new performance award for Elon Musk. In a released statement, the fund acknowledged the value created under Musk’s leadership but expressed concerns over the “total size of the award, the dilution of existing shares, and insufficient measures to address key person risk.” The fund indicated it plans to maintain a dialogue with Tesla’s board on governance matters.
The shareholder vote, scheduled for this week, comes as Tesla’s board argues the unprecedented incentive package is necessary to secure Musk’s long-term commitment to the company. The proposal would grant Musk additional stock if he can increase Tesla’s market valuation substantially over the coming decade, potentially raising his ownership stake significantly.
This marks the second consecutive year the Norwegian fund has opposed a major pay proposal for Musk. Last year, it voted against a then-record $56 billion package, which was initially approved by shareholders but later voided by a Delaware court. Reports indicate the fund’s previous opposition led to a strained private exchange between Musk and the fund’s chief executive.
The new proposal has divided shareholder advisory firms. Both Glass Lewis and Institutional Shareholder Services have recommended investors reject the plan, citing its excessive scale. Several large pension funds in the United States have also declared their opposition.
The compensation debate unfolds against a challenging backdrop for Tesla. The company is contending with a global slowdown in electric vehicle sales. Recent data shows sharp declines in new registrations across several European markets, while shipments from its key Shanghai factory have also fallen. Although sales saw a temporary boost in the U.S. ahead of the expiration of a federal tax credit, analysts warn of a potential downturn in its domestic market.
In public comments, Musk has questioned who else could lead the company, given its current valuation, while also warning of “rough quarters” ahead. The upcoming shareholder vote will be a critical test of investor confidence in both the company’s future trajectory and its governance structure.