Elon Musk's Pay Plan Faces Another Big Obstacle, As This Mega Wealth Fund Will Say 'No' to The $1 Trillion Reward

Norway's Government Pension Fund Global, one of the world's largest sovereign wealth funds, announced on Tuesday (November 4) that it will vote against Elon Musk's "trillion-dollar pay package" at Tesla's upcoming annual shareholder meeting.

Tesla is set to hold its annual shareholder meeting on November 6, where the voting results for several proposals, including Musk's compensation plan, will be announced.

Under the compensation plan, if Musk can increase Tesla's valuation to $8.5 trillion — nearly eight times its current valuation — over the next 10 years, he would receive an additional 12% of Tesla's shares. At this level, the proposed reward would be valued at slightly over $1 trillion.

(credit: @savetoinvest)

The size of the plan could be considered the largest compensation package in history. However, it includes a level of flexibility, meaning that if the company's market value does not experience significant growth, Musk will not receive a cent.

However, according to experts in corporate compensation, company valuations, robotics technology, and the automotive industry, even if Musk does not meet many of the targets outlined, he may still earn billions of dollars, leading to significant opposition from critics.

As of now, Norway's sovereign wealth fund is the only external investor in Tesla that has clearly stated its voting intention.

The Norwegian sovereign wealth fund, Norges Bank Investment Management, stated on its website, "While we recognize the immense value created by Mr. Musk's exceptional leadership, we have concerns about the total reward amount, dilution of equity, and the unresolved key-person risk — concerns that align with our views on executive compensation."

The fund is Tesla's seventh-largest shareholder, holding 1.12% of shares, valued at $17 billion. The fund had also voted against Musk's previous compensation plan (a $56 billion plan from 2018).

However, in contrast to Norges Bank Investment Management's statement, Tesla's other major shareholder, Baron Capital, said on Monday (November 3) that it will support Musk's compensation plan.

Other institutional investors in the company, such as BlackRock, Vanguard, and State Street, have yet to disclose their voting intentions.

As the shareholder meeting approaches, Tesla's board is actively working to secure shareholder approval for the plan. Last week, board chair Robyn Denholm warned that if Musk's compensation plan is rejected, Musk may leave the company, and the company may be preparing to appoint a new CEO from within.