In the latest development surrounding one of the most debated compensation packages in corporate history, Norway’s sovereign wealth fund has announced that it will vote against Tesla chief executive Elon Musk’s proposed $1 trillion pay deal. The move by the world’s largest national wealth fund, which holds a major stake in Tesla, has reignited global discussions about executive pay, corporate governance, and the growing influence of powerful shareholders in shaping company policy. The decision also reflects the tension between admiration for Musk’s achievements and concerns about concentrating too much power and wealth in a single individual.
The upcoming vote, scheduled for Tesla’s annual shareholder meeting, will determine whether Musk should receive the proposed incentive package, which could make him the first trillionaire in history. The proposal has divided investors and sparked a heated debate across the financial world. Supporters of the deal argue that Musk’s leadership has been central to Tesla’s rise as a market leader in electric vehicles, while critics say the deal is excessively large and could set a dangerous precedent for corporate compensation standards.
Norway’s $2.1 trillion sovereign wealth fund, officially known as Norges Bank Investment Management, is among Tesla’s top ten shareholders with a 1.1 percent stake in the company. Its decision to vote against the proposal carries weight, given its reputation for responsible investment practices and influence over global corporate governance. The fund, which manages Norway’s oil revenues, said that while it acknowledged the value created under Musk’s leadership, it had concerns about the overall size of the award and the potential dilution of shares. It also raised the issue of “key person risk,” referring to Tesla’s heavy dependence on Musk’s leadership and personality, a factor that could become a long-term vulnerability for the company.
“We appreciate the value created under Mr. Musk’s visionary role,” the fund said in its statement, “but we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk.” The statement added that the fund would continue to seek constructive dialogue with Tesla on executive compensation and related governance issues.
This is not the first time Norway’s fund has opposed Musk’s pay packages. Last year, it voted against what was then the largest executive remuneration deal in U.S. corporate history, a $56 billion package approved by Tesla shareholders in 2018 but later rejected by a Delaware court in 2024. That ruling described the deal as “unfair” to shareholders, arguing that Tesla’s board had not acted independently in negotiating the terms.
The new $1 trillion plan under consideration is structured as a performance-based incentive package. Musk would receive new Tesla shares if he manages to increase the company’s valuation from its current level of around $1 trillion to $8.5 trillion within ten years. If successful, his stake in the company would rise from nearly 16 percent to more than 25 percent, potentially pushing his personal fortune above $2 trillion. Critics say the targets are unrealistic, while supporters see them as an ambitious but achievable goal given Musk’s track record.
Tesla chair Robyn Denholm has defended the proposal, describing it as essential for retaining Musk as CEO. In a letter to shareholders, Denholm argued that the company risks losing considerable value if Musk were to step away from his leadership role.
However, the debate around the pay deal is not only financial but also philosophical. Investors are divided between those who see Musk as indispensable to Tesla’s success and those who believe no individual should wield such disproportionate influence over a public company. Some investors fear that rejecting the package could lead to Musk withdrawing from Tesla or diverting his focus to his other ventures, including SpaceX, Neuralink, and X (formerly Twitter). Others argue that no company’s future should hinge entirely on one person’s presence.
Two major shareholder advisory firms, Glass Lewis and Institutional Shareholder Services (ISS), have both recommended that investors vote against the proposed deal. They have described it as excessively large, poorly structured, and lacking sufficient safeguards for shareholders. Several major pension funds, including the California Public Employees’ Retirement System (CalPERS) and the American Federation of Teachers, have also declared their opposition, echoing concerns that Tesla’s board is too deferential to Musk.
Despite the mounting criticism, Musk still holds a strong position in the vote. With his own 15 percent stake, he can personally vote in favour of the deal, giving him a major advantage. In addition, large index funds such as BlackRock and Vanguard, which collectively own around 12 percent of Tesla’s shares, have yet to publicly disclose how they will vote. These funds often follow governance guidelines but may choose to support Musk to avoid potential instability within Tesla’s leadership.
In a post on X, the social media platform he owns, Musk responded to the controversy by saying, “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.” The comment was widely interpreted as a warning that he could step away from the company if shareholders fail to approve his compensation package. He also referred to advisory firms ISS and Glass Lewis as “corporate terrorists” for recommending a no vote.
This public dispute comes at a time when Tesla faces increasing business challenges. The company has seen a drop in vehicle deliveries, with global sales falling by 13 percent in the first half of the year due to supply disruptions and a redesign of the Model Y. In Europe, sales have fallen sharply, particularly in Scandinavian markets such as Sweden, Denmark, and Norway. Meanwhile, shipments from Tesla’s Shanghai factory have also declined by around 10 percent compared to last year, suggesting that demand in China, the company’s second-largest marketis, cooling.
Despite these challenges, Tesla remains the most valuable carmaker in the world, with a market capitalization of around $1.5 trillion. Supporters argue that Musk’s leadership has been central to maintaining this status. Over the past five years, Tesla’s stock price has tripled, making Musk the richest man in the world. Yet this concentration of wealth and power has also intensified scrutiny of his influence, particularly as he divides his time between multiple ventures.
The relationship between Musk and Norway’s wealth fund has also become personal. In 2024, after the fund voted against his earlier pay package, its CEO Nicolai Tangen invited Musk to a dinner in Oslo attended by global business leaders. Musk declined, later sending a text message to Tangen that was made public through a freedom of information request: “When I ask you for a favour which I very rarely do, and you decline, then you should not ask me for one until you’ve done something above nothing to make amends. Friends are as friends do.” The message reflected the sometimes tense relationship between Musk and major institutional investors.
