Moves by Tesla shareholders troubled investors prior to the Nov. 6 shareholder meeting: the depletion of a stock option pool that was once intended for worker compensation.
Several days after the meeting, Tesla published a letter from Robyn Denholm — Chairperson of the Board of Directors — confirming that a controversial proposal to set aside a "special share reserve" for Tesla CEO Elon Musk received "resounding approval." It will be part of Musk's massive compensation package, yet it isn't technically part of the $1 trillion deal, per Electrek.
What's happening?
Prior to Tesla's shareholder meeting on Nov. 6, Electrek reported on "Proposal 3," which would refill of Tesla's "general share reserve." This was needed because Tesla's employee stock option pool had been drained in the past to fund an "Interim Award" of $26 billion to Musk. These shares were also meant for compensating employees and attracting new talent.
Proposal 3 combines the employee share with 208 million allocated "special" shares worth $97 billion, all of which would go to Elon Musk. To replenish the 120,000-employee pool, shareholders gave their controversial approval. That being "Musk will have 3.5 [times] as many shares … as will be set aside for every other employee at the company combined," according to Electrek.
This proposal is independent from Musk's $1 trillion stock award (Proposal 4), per Electrek. Shareholders also supported Proposal 4 at the Nov. 6 meeting, according to Denholm's letter.
Why is Tesla reappropriating employees' pay important?
Critics warn negative implications loom over Tesla's employees and the company's future. Concerns about talent retention and morale at the electric vehicle giant are escalating.
Employee stock options are also a critical component of compensation packages. They help leading companies attract and keep top talent in competitive industries.
If Tesla is unable to offer competitive stock-based compensation, it could face recruiting challenges.
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The broader market for electric vehicles continues to grow as automakers release new models. Drivers switching to EVs have many options other than Tesla.
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Consumers could also have to deal with slower product development or production challenges.
Electrek highlighted the profound impact this could have on morale, stating: "It must feel incredibly insulting for the engineers who actually design the cars … to see a guy who spends most of his time working for other companies … be told that he's worth hundreds of thousands of times more than you are."
Internal issues could affect progress toward a cleaner, more sustainable future. A strong, motivated workforce is crucial for driving forward advancements in EV technology.
What's being done about the Tesla proposal?
The bundling of employee and CEO compensation votes is unusual, as Electrek covered extensively.
This development at Tesla raises questions about internal equity and talent acquisition, even as the pace of electrification in the automotive sector remains robust.
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