Norway’s sovereign wealth fund has said it will vote against a $1tn (£765bn) pay package for the Tesla chief executive, Elon Musk.
The fund, which is the biggest national wealth fund in the world, said that while it appreciated the “the significant value created under Mr Musk’s visionary role” it would vote against his performance award.
“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,” it said. “We will continue to seek constructive dialogue with Tesla on this and other topics.”
The warning from Norges Bank, which is the seventh biggest single shareholder in Tesla with a stake worth $17bn, comes two days before the carmaker hosts its annual shareholder meeting.
On Thursday, investors will vote on proposals for an unprecedented incentive package that could make Elon Musk the world’s first trillionaire.
If Musk increases the value of Tesla from about $1tn to $8.5tn over the next 10 years, Musk will receive new shares that would push his stake in the company from nearly 16% to more than 25%.
This would increase the fortunes of the world’s richest man to more than $2tn.
The Tesla chair, Robyn Denholm, has argued the vote is essential to retain the 54-year-old Musk as chief executive of the company, writing in a letter to shareholders that the company risks losing “significant value” if he were to leave.
Last year, the Norwegian oil fund voted against what was then the biggest pay package in US corporate history of $56bn for Musk. The deal was approved by shareholders in June but was rejected for a second time by a court in Delaware in December.
Nicolai Tangen, the chief executive of the Norwegian fund, invited Musk and other chief executives to dinner in Oslo last year. However, Musk turned down the invite after the fund voted against the $56bn pay deal.
A text exchange between Tangen and Musk was revealed in a freedom of information request by the Norwegian business publication DN. It reported that Musk wrote to Tangen in October last year: “When I ask you for a favour which I very rarely do, and you decline, then you should not ask me for one until you’ve done something above nothing to make amends. Friends are as friends do.”
Shareholders are divided on the new deal, although two influential shareholder advisory groups – Glass Lewis and ISS – have both recommended that investors reject the $1tn package.
Some big pension funds have also opposed the pay package, including the American Federation of Teachers and the California Public Employees’ Retirement System, the largest public scheme in the US.
Musk, who is Tesla’s biggest single shareholder, can also vote on the proposal.
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Last month, the Tesla boss said on X, the social media website he bought in 2022: “Tesla is worth more than all other automotive companies combined. Which of those CEOs would you like to run Tesla? It won’t be me.”
Tesla has been trying to find ways to keep Musk as chief executive as it grapples with falling sales – global vehicle deliveries fell 13% in the first half of the year. That was partly due to the disruption from the redesign of its popular Model Y car.
The carmaker reported a 7% rise in its most recent quarter, as many US consumers rushed to buy electric cars before a $7,500 government purchase incentive ended in September. However, now these tax credits have expired, and the company faces a potential slowdown in its home market.
Tesla sales have also been falling across much of Europe: new car registrations dropped 89% in Sweden, 86% in Denmark, 50% in Norway and 48% in the Netherlands in October, according to local industry data.
France was an outlier, where the company made a small gain in sales for the second month in a row.
Meanwhile, data from the Chinese Passenger Car Association released on Tuesday, showed that shipments from its Shanghai factory continued to decline, with 61,497 units shipped in October, down about 10% compared with last year.
Tesla was approached for comment.
