Norway's $2 trillion sovereign wealth fund said Tuesday it will vote against Elon Musk's proposed $1 trillion pay package at Tesla's annual shareholder meeting, breaking ranks with management despite warnings from Musk that he might step down if the plan is rejected.
The fund, managed by Norges Bank Investment Management (NBIM), one of Tesla's largest investors, said it had already cast its vote, citing the "total size of the award, dilution, and lack of mitigation of key person risk" among its main concerns.
"While we appreciate the significant value created under Mr. Musk's visionary role, we are concerned about the total size of the award," NBIM said in a statement, adding that it would continue "constructive dialogue" with Tesla on governance and compensation issues.
Concerns about the total size of the award
NBIM holds a 1.14% stake in Tesla, worth about 118.3 billion Norwegian kroner ($11.6 billion) as of June. Tesla shares fell 2.5% in premarket trading following the announcement.
The proposed plan would grant Musk nearly $1 trillion in stock options over the next decade, contingent on performance milestones, effectively expanding his voting power at the company.
The deal has faced mounting opposition from unions, shareholder groups, and proxy advisors ISS and Glass Lewis, who argue that the compensation package is excessive. Musk dismissed their criticism, calling the firms "corporate terrorists."
Last year, NBIM also voted against reinstating Musk's previous $56 billion pay package, which a United States judge had overturned before it was later reapproved by shareholders. Musk, whose fortune is estimated at $504 billion, remains the world's richest person, according to Forbes.