One of Tesla's top ten shareholders challenges Musk's trillion-dollar compensation plan

Norway's $1.9 trillion sovereign wealth fund has become the first major investor to publicly oppose Tesla (TSLA) CEO Elon Musk's newly proposed $1 trillion compensation package.

The investment arm of Norges Bank—Norges Bank Investment Management—voiced concerns about the scale of the compensation plan on Tuesday.

“While we recognize Mr. Musk’s visionary leadership has created significant value for the company, we are concerned about the overall size of the award, the issue of equity dilution, and the lack of mitigation of key person risk—this is consistent with our longstanding position on executive compensation,” the department said in a statement. “We will continue to engage in constructive dialogue with Tesla on this and other matters.”

On Thursday, November 6, Tesla will hold its annual shareholder meeting and announce the results of several proposals, including Musk’s compensation plan. According to the plan, if Musk can raise Tesla’s valuation to $8.5 trillion (nearly eight times its current value) over the next decade, he will receive an additional 12% stake in Tesla. At that point, the value of the compensation package would slightly exceed $1 trillion.

Tesla Chair Robyn Denholm believes this vote is crucial to retaining Musk as CEO. Musk has publicly threatened that if shareholders reject his compensation plan again, he will resign.

Last year, Norway’s sovereign wealth fund, one of Tesla’s top ten shareholders (holding 1.1%), voted against Musk’s then $56 billion compensation plan—the largest executive compensation plan in U.S. corporate history. Although the $56 billion plan was approved by shareholders in June last year, it was struck down for a second time by a Delaware court in December.

Two major shareholder advisory firms—Glass Lewis and Institutional Shareholder Services (ISS)—have both recommended that investors reject the latest $1 trillion compensation plan. The plan is tied to ambitious milestones for Tesla’s stock price and operational performance.

A group of large pension funds have also issued an open letter opposing the compensation plan, stating that the Tesla board’s “obsession with retaining the CEO” has damaged the company’s reputation and led to excessive executive compensation.

Norway’s sovereign wealth fund has previously drawn Musk’s ire over compensation issues. Earlier this year, the fund’s CEO Nicolai Tangen invited Musk and other CEOs to dinner in Oslo, but after the fund voted against the $56 billion compensation plan, Musk declined the invitation.

“When I rarely ask you for help and you refuse, you shouldn’t ask me for anything until you take real action to make amends. Friends should help each other.” Musk said in a text message to Tangen in October 2024. The message was disclosed by Norway’s sovereign wealth fund in response to a freedom of information request.

The Norwegian fund usually announces its voting intentions five days before a company’s annual shareholder meeting, but this time, it released its voting intentions for Tesla only two days in advance. The fund stated that this was to “ensure all relevant information had been obtained and could be included in our analysis.”

Last month, Musk addressed criticism of the compensation plan on his social platform X, writing: “Tesla’s market value exceeds that of all other car companies combined. Which company’s CEO would you want to run Tesla? It certainly wouldn’t be me.” He also referred to ISS and Glass Lewis as “corporate terrorists.”

The wealth of the world’s richest man is mainly concentrated in Tesla stock. Over the past five years, Tesla’s share price has more than doubled, with its market value soaring to $1.5 trillion.

Last month, Denholm told the Financial Times that if Tesla fails to retain Musk, “it would not be a good outcome for shareholders,” but she added that if Tesla loses this vote, she does not believe Musk will take any “sudden and harmful” action.