Major Investor to Vote Against $1 Trillion Elon Musk Pay Package

Norges Bank Investment Management, the investment arm of Norway’s central bank, is Tesla’s sixth-largest institutional shareholder.

Elon Musk attends the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, on March 22, 2022. Patrick Pleul/Pool via Reuters

Norges Bank Investment Management, the investment arm of Norway’s central bank and one of the largest investors in Tesla, announced on Nov. 4 that it would vote against a proposed $1 trillion pay package for Tesla CEO Elon Musk.

The investment fund, which holds 1.16 percent of Tesla’s shares, making it the company’s sixth-largest institutional investor, expressed concerns about the total size of the proposed compensation package, which would be paid out over the next decade if all performance targets are met.

“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. We will continue to seek constructive dialogue with Tesla on this and other topics,” Norges said in a statement.

Tesla will hold its annual shareholder meeting on Nov. 6 and is expected to announce the voting results of more than a dozen proposals, chief among them Musk’s massive compensation package, which could boost his personal stake in the electric vehicle manufacturer by as much as 12 percent should he hit a host of operating and production goals, including creating growth that values the company at a staggering $8.5 trillion—about 6 times more than Tesla’s current market valuation of approximately $1.4 trillion.

Musk currently owns nearly 16 percent of Tesla’s shares.

In 2018, Musk’s performance-based compensation package was tied to a dozen valuation milestones targeting an increase in the company’s market value to $650 billion. The pay plan was rescinded this past January by a Delaware judge but was reinstated in June by shareholders representing 77 percent of Tesla’s shares.

Approving the compensation package and retaining Musk as the company’s CEO are crucial to Tesla’s evolution into a multi-trillion-dollar company, Robyn Denholm and Kathleen Wilson-Thompson, members of Tesla’s special committee of the board of directors, said in a September letter to shareholders.

“Retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history,” they wrote. “We are building upon the chassis of the wildly successful performance and shareholder value Elon delivered under the innovative 2018 CEO Performance Award program and have customized it for today’s Tesla.”

Some institutional investors are expected to vote for the compensation package. Ron Baron, founder of Baron Capital of New York, which holds about 0.4 percent of Tesla’s shares, said in a lengthy post on X that the pay package ensures Musk remains at the helm of Tesla.

“Baron Capital has been investing in Tesla since 2014. Our shareholders and clients have benefited enormously from Elon Musk’s vision, determination and execution. Tesla’s success and future are inseparable from Elon,” he said.

Tesla shares dropped more than 5 percent ahead of the crucial Thursday vote.

The Associated Press contributed to this report.