Tesla’s proposed $1 trillion compensation plan for Elon Musk has suffered a major setback after Norway’s sovereign wealth fund — the world’s largest institutional investor — declared it will vote against the deal. The move adds momentum to the growing opposition from global investors questioning the scale and structure of the package.
In its statement, the fund said that while it “recognises the significant value created under Mr Musk’s leadership,” the sheer size of the award and its potential to dilute shareholder equity were unacceptable. It also warned that Tesla remains overly dependent on Musk, raising “key person risk” concerns that have long troubled governance experts.
The proposed incentive plan would grant Musk new share awards if Tesla’s market value increases from about $1 trillion to $8.5 trillion within ten years. If these targets are achieved, Musk’s stake could rise from roughly 16 % to more than 25 %, cementing his control and potentially making him the world’s first trillionaire.
Tesla’s board argues that the plan is essential to retain Musk, whose leadership has been pivotal in transforming Tesla into a dominant player in the electric vehicle market. Chair Robyn Denholm told shareholders that Musk’s continued involvement was “critical to sustaining innovation and long-term growth.”
However, proxy advisory firms Glass Lewis and Institutional Shareholder Services have urged investors to reject the proposal, citing concerns about excessive pay and inadequate governance oversight. They argue that the structure lacks balance between performance and reward.
The wealth fund’s opposition is not new. It previously voted against Musk’s 2018 compensation plan — valued at $56 billion — which was later struck down by a Delaware court on procedural grounds. The new $1 trillion proposal, more than 15 times larger, has reignited the debate over Tesla’s board independence and accountability.
As Tesla faces falling vehicle sales across key markets and intensifying competition from Chinese automakers, critics say the timing of such an enormous award sends the wrong message. The shareholder vote later this week will determine whether investors back Musk’s vision or demand greater restraint in executive compensation.