OSLO/BOSTON: Global investors are divided ahead of a crucial shareholder vote on Elon Musk's proposed US$1 trillion Tesla pay package, after Norway's sovereign wealth fund said it would oppose the deal, citing concerns over its size and governance risks.

The fund, Norges Bank Investment Management (NBIM), Tesla's sixth-largest outside investor, announced on Tuesday that it would vote against ratifying the compensation plan and against two members of Tesla's board. The move adds uncertainty to Thursday's vote and could influence other European investors who share Norway's focus on environmental, social, and governance (ESG) principles.

"European voters are much more likely to be swayed by where Norges goes, because of the general support of ESG principles and concerns in their investment philosophy," said Francis Byrd, a partner at consulting firm Alchemy Strategies Partners.

Tesla has urged shareholders to approve the plan, with Chair Robyn Denholm warning that Musk could leave the company if the deal is rejected. The electric vehicle maker, valued at about $1.5 trillion, said the pay package rewards extraordinary performance and ensures alignment between Musk and investors.

Tesla did not respond to requests for comment.

While the proposal is expected to pass, given strong retail investor support and Musk's own 15.3 percent voting stake, NBIM's opposition highlights growing unease among institutional investors. "Less predictability is the watchword for 2025, and certainly for complicated votes like at Tesla," said Karla Bos, an independent governance consultant in Arizona.

NBIM manages $2.1 trillion in assets and owns 1.12 percent of Tesla. It is the only top-ten outside shareholder to publicly disclose its vote. The fund said it appreciates Musk's leadership but believes the award is excessive.

"While we appreciate the significant value created under Mr. Musk's visionary role, 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," NBIM said on its website.

The fund also said it would vote against directors Kathleen Wilson-Thompson and Ira Ehrenpreis, both members of Tesla's compensation committee, while backing Joe Gebbia, who joined the board in 2022.

The pay deal could give Musk stock worth up to $1 trillion over 10 years, though after accounting for costs at the time of the award, its real value would be closer to $878 billion, according to a Reuters analysis. The payout would only be realized if Tesla reaches a market capitalization of $8.5 trillion, nearly six times its current value.

In contrast to Norway's stance, Schwab Asset Management, Tesla's 15th-largest outside investor, said it would back the package as one that "aligns both management and shareholder interests." Baron Capital also supports the plan, while major investors BlackRock, Vanguard, and State Street have yet to disclose their positions.

Proxy advisory firms ISS and Glass Lewis have both recommended a "no" vote, warning that the package is disproportionately large and risks diluting shareholder value.

Tesla's European sales have recently shown signs of strain, with October deliveries in Norway falling 50 percent year-on-year, as competition intensifies and some buyers react to Musk's close political ties with U.S. President Donald Trump.

The shareholder vote will test whether Musk's past success in driving Tesla's meteoric rise outweighs growing concerns over governance, concentration of power, and accountability at one of the world's most valuable companies.