A major Tesla shareholder has announced it will vote against an eye-watering compensation package for the electric car company’s chief executive, Elon Musk, worth up to $1 trillion.
Norway’s Norges Bank Investment Management, the world’s largest sovereign wealth fund, confirmed it will reject the proposal, which would grant Musk an additional 12 percent stake in Tesla if the world’s richest man grows the company to an $8.5 trillion valuation over the next 10 years.
“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,” Norway’s sovereign wealth fund said in a statement.
Norges Bank, which holds a 1.14 percent stake in Tesla, is the first major institutional investor to publicly disclose its vote ahead of the company’s annual shareholder meeting later this week. Smaller shareholders, including the American Federation of Teachers, have also criticized the package, according to The Wall Street Journal.
In 2024, the Norwegian fund also voted against a proposed $56 billion Musk compensation package, which a Delaware judge later canceled while ruling it to be excessive. Tesla is appealing the decision to the state’s Supreme Court.
Last month, Tesla chair Robyn Denholm wrote to shareholders ahead of the Nov. 6 meeting, warning that Musk may leave the company if the $1 trillion deal is rejected. The unprecedented deal is being offered with the hope that it will convince Musk to lead Tesla for years to come.
“Without Elon, Tesla could lose significant value, as our company may no longer be valued for what we aim to become,” Denholm wrote in the Oct. 27 letter.
“While there may be nothing wrong with being just another car company, our Board believes that Tesla can be more, that our shareholders deserve more, and that Elon is the right leader to help us achieve our full potential.”
Musk, Tesla’s largest single shareholder, can also vote on whether to approve his own $1 trillion compensation package.
Tesla shares fell by nearly 3 percent in premarket trading on Tuesday morning.
The Daily Beast has contacted Tesla for comment.
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