The central debate over Elon Musk’s $1 trillion pay deal boils down to a single, paradoxical term: “key person risk.” Both sides are using it to argue their case.
Norway’s sovereign wealth fund, a $17 billion investor, is voting “no.” It explicitly cited a “lack of mitigation of key person risk,” suggesting the deal makes Tesla too reliant on one man.
On the other hand, Tesla’s board, led by chair Robyn Denholm, is making the exact opposite argument. She warns that the real “key person risk” is losing Musk, and this $1 trillion package is the only way to “mitigate” that risk.
This fundamental clash in perspectives highlights the divide. Is Musk’s pay a “golden handcuff” that protects shareholders, or is it a “golden cage” that exposes them to unacceptable risk?
The Norwegian fund, along with advisory firms ISS and Glass Lewis, has chosen the latter, setting the stage for a dramatic shareholder vote on this very definition.