Saving, cutting jobs and at the same time enabling the boss to receive record pay: for the electric car manufacturer Tesla That doesn’t seem to be a contradiction. Three months after the district judge Kathaleen McCormick the planned stock compensation package for Elon Musk as “incorrect” and “disproportionate”, the company is making another attempt to push through the compensation model for Musk at the annual general meeting in June. This emerges from documents to the US Securities and Exchange Commission that Tesla submitted on Wednesday.
The controversial compensation model provides for shares worth up to $56 billion for Musk. That model was overturned in January by Judge McCormick of Delaware after an investor named Richard Tornetta sued the compensation program. After the judge’s ruling, Musk announced that he would move Tesla’s headquarters and stock exchange listing from Delaware to Texas. The headquarters move has already been completed, and shareholders should now approve the listing in Texas in addition to the remuneration model.
If a majority of investors vote for the two proposals during the general meeting, the way for the planned record remuneration would be clear again. It would then be up to a district judge in the state of Texas to decide on possible new lawsuits against the salary package. The lawsuit in Delaware at the time was based, among other things, on the fact that Musk had practically dictated the conditions for his own compensation program. The Board of Directors did not fulfill its supervisory obligation at the time. Instead of controlling Musk, the board worked together with him, according to the judge’s ruling.
Savings in the company, billions for the boss
Now Tesla is making another attempt. However, shareholders’ approval of the proposals is not a sure-fire success, as the mood among shareholders at Tesla has also deteriorated. The shares of the former stock market high-flyer have fallen by around 40 percent this year, bucking the generally positive trend, as demand for electric cars is significantly weaker than forecast. Tesla had started a discount battle in the past few months in order to compete with the new Tesla models Chinese To get enough competition onto the streets at all. This has depressed profitability.
Particularly spicy: Due to weak global demand, Tesla announced internally just a few days ago that to cut every tenth position in the group. It is important to “look at every aspect of the company in terms of costs and productivity,” the US news portal “Electrek,” which specializes in the electric car market, quoted on Monday from an internal email from the Tesla boss. According to its own information, Tesla employed 140,473 people worldwide at the end of 2023. This means that more than 14,000 jobs are now at risk. Meanwhile, Tesla rejected reports that Tesla also wanted to cut around 3,000 jobs at the Gigafactory in Grünheide, Brandenburg.
Shareholders will still find it difficult in June to approve the compensation package for Musk in addition to the company’s complete move to Texas. Tesla has now left the group of high performers on the stock market. Support for the eccentric company boss has also suffered. The demand to put every tenth employee out on the street and at the same time pay out $56 billion to the boss is likely to cause discussions.
Reason for Robyn Denholm, the Chairman of the Board of Directors, in a letter to shareholders, a lance for Elon Musk to break and gain approval for the company’s plans. Musk achieved all of the growth goals that were set for him in 2018. Because of the district judge’s decision in Delaware, Musk received virtually no compensation for his work over the past six years. This is “extremely unfair” to Musk and also contradicts the will of the shareholders, the majority of whom voted for the compensation package at the time.
Farewell to Delaware, moving to Texas
In addition, Tesla has even hired shareholder advisor Innisfree M&A to intensively promote the company’s two proposals to investors in the coming weeks. reports the news channel CNBC
. The company was hired by Tesla again for the first time since 2018.
Given the planned job cuts, it remains to be seen whether shareholders will see it the same way at the upcoming general meeting on June 13th. Some investors might come up with the idea that Musk should also make a savings contribution.
McCormick’s ruling prompted Musk to say in January that one should “never locate one’s headquarters in Delaware.” The US state has so far enjoyed a good reputation in Corporate America because of its reliable legal framework – more than half of the companies in the S&P 500 have their headquarters there. But Musk sees the future for Tesla and his other companies like X and Neuralink in Texas instead. McCormick and Musk will no longer be friends anyway: McCormick was also scheduled to be the presiding judge in the trial with the aim of obliging Musk to buy Twitter. Musk, who wanted to cancel the takeover at the last minute, decided to take over before the process began.