Norway Fund Says ‘No’ to Musk’s $1 Trillion Tesla Payday

• Norway’s $2 trillion sovereign wealth fund, through Norges Bank Investment Management, voted against Elon Musk’s nearly $1 trillion stock-based compensation package at Tesla’s shareholder meeting, citing concerns over its size, shareholder dilution, and insufficient mitigation of key person risk despite recognizing Musk’s value creation.
• The decision aligns with opposition from the Take Back Tesla coalition and proxy advisors ISS and Glass Lewis, while Musk has dismissed critics as “corporate terrorists” and hinted at stepping down if rejected, highlighting ongoing governance tensions.
• This follows NBIM’s prior rejection of Musk’s $56 billion pay reinstatement last year, which led to personal exchanges with the fund’s CEO, underscoring persistent friction in Tesla’s executive reward structure amid its market dominance.

Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund with assets exceeding $2 trillion, has cast its vote against Elon Musk’s proposed compensation package at Tesla Inc. (TSLA), underscoring deepening tensions over executive pay in one of the electric vehicle maker’s most pivotal shareholder decisions. As a major institutional investor holding a 1.14% stake in Tesla – valued at 118.3 billion Norwegian kroner, or $11.6 billion, based on mid-year disclosures – Norges Bank Investment Management (NBIM), the fund’s steward, explicitly rejected the multibillion-dollar award despite acknowledging Musk’s instrumental role in driving the company’s market dominance.

The package under consideration would grant Musk nearly $1 trillion in stock awards, alongside an expansion of his voting control, all tied to Tesla achieving predefined performance milestones across the next decade. This structure, while designed to align incentives with long-term growth, has ignited widespread scrutiny for its sheer magnitude and potential to exacerbate shareholder dilution without sufficient safeguards against over-reliance on a single leader. NBIM’s position reflects a broader philosophy on remuneration, prioritizing proportionality and risk mitigation even as it credits Musk for the transformative value he has unlocked at Tesla, which boasts a market cap – $1.56T as of last check – surpassing that of all other major automakers combined.

This stance places NBIM in alignment with a growing chorus of dissenters. Last month, the Take Back Tesla coalition – comprising labor unions and governance advocates – mobilized shareholders to oppose the plan, citing its excessiveness in an era of heightened accountability for corporate boards. Influential proxy advisory firms Institutional Shareholder Services and Glass Lewis have similarly urged rejection, prompting Musk to dismiss their guidance as the work of “corporate terrorists” during a recent earnings discussion. Such rhetoric highlights the fractious dynamics at play, where Tesla’s board, led by loyalists to Musk, faces pressure to defend a proposal that could cement his influence amid ongoing legal and market headwinds.

Musk’s retort on X, the platform he owns, cut to the core of the debate: “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 veiled threat of departure echoes his history of leveraging personal leverage in compensation battles, a tactic that has both galvanized supporters and alienated stewards like NBIM. The fund’s managers, undeterred, have signaled openness to ongoing discussions with Tesla on governance matters, a nod to their role as an active owner committed to stewardship rather than confrontation.

The friction is not new. Just last year, NBIM opposed the reinstatement of Musk’s prior $56 billion package – the largest in U.S. corporate history – which a Delaware judge had voided before shareholders ultimately ratified it. That episode spilled into personal territory, with leaked text exchanges between Musk and NBIM’s chief executive, Nicolai Tangen, revealing the Tesla leader’s rebuff of a dinner invitation in Oslo. Musk’s message was pointed: “When I ask you for a favor, which I very rarely do, and you decline, then you should not ask me for one until you’ve done something to make amends. Friends are as friends do.” Such exchanges underscore the interpersonal stakes in these institutional clashes, where professional disagreements can strain even the most cordial ties.

For Tesla, the vote arrives at a juncture of strategic recalibration. With shares dipping 2.3% to $457.57 in premarket trading ahead of the annual meeting, the outcome could ripple through investor confidence, particularly as the company navigates production ramps for autonomous driving tech and energy storage expansions. Musk, Forbes’ ranking of the planet’s richest individual with a $504 billion fortune largely tethered to Tesla equity, embodies the high-wire act of founder-led innovation: his vision has propelled the firm from niche disruptor to global powerhouse, yet it also amplifies vulnerabilities tied to his singular sway. Sovereign funds like Norway’s, with their ethical investment mandates and long-horizon focus, serve as crucial counterweights, enforcing discipline in an industry where executive rewards often outpace tangible safeguards.

Ultimately, this proxy battle tests the boundaries of performance-based pay in high-growth tech firms. While Musk’s track record justifies premium incentives, the scale here risks entrenching inequities that could undermine Tesla’s appeal to a diverse shareholder base. As ballots close, the resolution will not only shape Musk’s tenure but also signal how global investors calibrate ambition against accountability in the electric mobility era.

WallStreetPit does not provide investment advice. All rights reserved.

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