World’s Largest National Fund Rejects Elon Musk’s Record Breaking Tesla Pay Deal
The world’s largest national investment fund has thrown its significant financial weight against what could become the biggest chief executive pay deal in corporate history. Norway’s $2.1 trillion national wealth fund, which holds a substantial stake in Tesla Inc., announced its plan to vote against a proposed stock option package for chief executive Elon Musk.
The influential move by the Norwegian fund, known as Norges Bank Investment Management (NBIM), comes just before Tesla’s crucial annual shareholder meeting on November 6. The fund owns a 1.12 percent stake in Tesla, valued at approximately $17 billion, making its opposition a powerful statement to other investors globally.
Concerns Over Size and Power
In a statement explaining its decision, NBIM acknowledged the immense value Mr. Musk has created for the company. However, the fund expressed deep concern over three main issues regarding the deal.
First, it is worried about the total size of the award. The pay package has the potential to grant Mr. Musk stock worth up to $1 trillion over the next decade if Tesla’s market value soars to an unprecedented $8.5 trillion, nearly six times its current level. This massive size, the fund argues, is simply too large.
Second, the fund is concerned about the issue of share dilution. Granting such a huge amount of stock to Mr. Musk means that new shares must be created. This process would reduce the ownership percentage and, consequently, the value of the shares already held by every existing investor, including Norway’s fund.
Third, the NBIM pointed to the lack of safeguards against relying too heavily on one single person. This is known in the financial world as key person risk. While Mr. Musk is widely seen as the driving force behind Tesla’s success in electric vehicles, artificial intelligence, and robotics, the fund believes the company should do more to reduce its structural dependence on any one individual.
Tesla’s Ultimatum and Investor Divide
The vote is seen by many as a critical moment for Tesla’s future leadership. Robyn Denholm, the Chair of Tesla’s board, has strongly urged shareholders to approve the package. She warned that rejecting the deal could potentially cause Mr. Musk to leave the company, arguing that the vote is essential to secure the continuation of the visionary leadership that built Tesla.
The dispute has sharply divided the investment community.
The Norwegian fund is not alone in its opposition. The California Public Employees Retirement System (CalPERS), another major institutional investor, also stated it would vote against the plan. CalPERS argued that the deal was far larger than any other chief executive pay deal and gave Mr. Musk an unacceptable amount of power within the organization.
On the other side of the debate, several high-profile investors and industry figures have publicly endorsed the package. Investment firm Baron Capital stated it would back the deal. Supporters like Michael Dell, Cathie Wood, and Jim Cramer have all praised Mr. Musk’s ambition, visionary role, and success in driving Tesla’s explosive growth. Gary Black of The Future Fund believes there is a near zero chance the shareholders will reject what he called one of the largest corporate payouts in history.
The final tally will reveal whether Tesla’s shareholders favor rewarding Mr. Musk’s bold and unprecedented vision for the company or whether they prefer to rein in what they view as excessive and undiluted executive compensation. The outcome will set a powerful precedent for how global corporations compensate their most impactful leaders.
