According to Business Insider, Norges Bank Investment Management, which manages Norway’s $2 trillion sovereign wealth fund, announced on Tuesday it had voted against Elon Musk’s proposed $1 trillion compensation package ahead of Tesla’s annual shareholder meeting on Thursday. The fund, which holds a 1.2% stake in Tesla making it the company’s sixth-largest institutional investor, expressed concerns about the package’s size, potential dilution, and insufficient mitigation of Musk’s “key person risk” despite acknowledging the “significant value” created under his leadership. This marks the second time the Norwegian fund has voted against Musk’s compensation, having also rejected his previous pay package in 2024. The decision comes as proxy firms Glass Lewis and ISS have urged shareholders to vote against the plan, while other major investors including Florida’s State Board of Administration and ARK Invest’s Cathy Wood have expressed support. This high-stakes governance battle sets the stage for a critical shareholder vote that could reshape executive compensation standards globally.
The Growing Power of Sovereign Wealth Funds
Norges Bank’s decision represents more than just another institutional vote—it signals the expanding influence of sovereign wealth funds in global corporate governance. With $2 trillion in assets, the Norwegian fund’s stance carries particular weight because it operates under strict ethical guidelines that emphasize long-term value creation and responsible ownership. These funds increasingly see themselves as stewards of intergenerational wealth rather than passive investors, making them particularly sensitive to governance issues that could jeopardize long-term returns. The Norwegian fund’s consistent opposition to Musk’s compensation packages—both in 2024 and now—demonstrates a principled approach that transcends short-term performance considerations.
The Critical Problem of Key Person Risk
The fund’s concern about “key person risk” highlights a fundamental vulnerability at Tesla that extends far beyond compensation debates. When a company’s valuation becomes so intrinsically tied to a single individual, it creates systemic risk for all stakeholders—from assembly line workers to suppliers to long-term investors. Tesla’s situation is particularly acute given Musk’s divided attention across multiple high-profile companies including SpaceX, Neuralink, and xAI. The absence of a clear succession plan or robust management bench strength means that any disruption to Musk’s involvement could trigger catastrophic value destruction. This isn’t merely about whether Musk deserves the compensation—it’s about whether Tesla has built an organization resilient enough to survive beyond its visionary founder.
Setting a Dangerous Compensation Precedent
At $1 trillion, Musk’s proposed package represents more than just generous compensation—it threatens to redefine the upper limits of executive pay in ways that could destabilize corporate governance norms globally. The package’s sheer scale dwarfs not only typical CEO compensation but even the market capitalizations of most Fortune 500 companies. If approved, it would establish a precedent that could justify similarly astronomical packages elsewhere, potentially diverting capital from research, development, and workforce investment toward singular individuals. More troublingly, it could normalize compensation structures where executives benefit disproportionately from broad market trends rather than individual performance, creating misaligned incentives across the corporate landscape.
The Deepening Divide Among Institutional Investors
The split among major Tesla investors reveals fundamental philosophical differences about corporate governance in the technology sector. On one side, growth-focused investors like ARK Invest prioritize visionary leadership and disruptive innovation, often willing to overlook governance concerns for extraordinary returns. On the other, traditional institutional investors and pension funds like CalPERS and the New York State Retirement Fund emphasize stability, accountability, and sustainable governance practices. This divide reflects broader tensions in markets increasingly dominated by founder-led tech companies where traditional governance checks and balances often take a backseat to charismatic leadership and rapid growth narratives.
Broader Implications for Tech Governance
This vote represents a watershed moment for technology company governance that will influence how investors approach founder-led companies for years to come. The outcome could either reinforce the trend toward concentrated power in visionary founders or signal that even the most successful entrepreneurs must adhere to established governance principles. As Tesla’s proxy statement outlines ambitious targets including reaching an $8.5 trillion market cap and selling 1 million Optimus robots, investors must weigh whether these goals justify unprecedented governance concessions. The decision will likely influence how other tech companies structure executive compensation and address succession planning, particularly as many face their own transitions from founder-led startups to mature public companies.
