Will Tesla boss Elon Musk subsequently receive a share package worth billions? The shareholders should decide on this. Meanwhile, the job cuts are also reaching the German plant in Grünheide.
Tesla wants to let its shareholders vote again on a share package worth tens of billions of dollars for company boss Elon Musk, which was torpedoed by a court. At the same time, according to the electric car manufacturer’s wishes, they should decide whether to relocate the official company headquarters from Delaware to Texas.
This emerges from documents for the Tesla general meeting on June 13th. The step comes a few days after the announcement that more than one in ten jobs would be cut – which also has consequences for the German plant in Grünheide.
Shareholders were not correctly informed about the procedure in 2018
The share package approved by shareholders in 2018, whose value was then stated at $56 billion, was overturned by a judge in Delaware following an investor lawsuit. She came to the conclusion that Musk had too much influence in the background when agreeing the generous compensation on the Tesla board of directors to be able to speak of a fair process. And shareholders were left in the dark about it, meaning they had no opportunity to make a well-considered decision.
After the verdict at the end of January, Musk immediately expressed his openness to Tesla moving to Texas. He had already moved the company headquarters from California to the large factory in Austin, Texas. The Delaware rules would continue to apply to his remuneration in the period up to a move.
According to the 2018 plan, Musk could get stock options with a maximum value of up to $55.8 billion in twelve steps if Tesla’s stock market value and business figures grew with certain minimum values. The judge ruled that Tesla’s shareholders had not been properly informed about the process in which the huge package was negotiated. Musk had close connections with some people who were involved in the negotiations on Tesla’s side.
Question of “fairness and respect”?
At the same time, Tesla admitted in the documents that it was not sure whether a renewed confirmation of the share package by the shareholders would be valid in view of the judgment. Several board members remain very close to Musk. On the other hand, Tesla could now argue that investors now know about it simply because of the judge’s detailed ruling. Tesla had also announced that it would appeal the court decision.
Another catch is that since 2018, Tesla’s market value has clearly exceeded the mark of around $650 billion set for Musk’s maximum compensation – but is now below it again after the recent rapid decline in the share price. The head of the Tesla board of directors, Robyn Denholm, emphasized in a letter to shareholders that following the court decision, Musk had not been paid for his work at the electric car manufacturer over the past six years. It is a question of “fairness and respect” to vote for the share package again.
Thanks to his shares, especially in Tesla and the space company SpaceX, Musk is one of the richest people in the world. However, his assets also shrank somewhat as Tesla shares fell. The financial service Bloomberg currently ranks him fourth in its rich list with an estimated fortune of $174 billion.
Tesla is cutting off 300 employees in Germany
Tesla recently recorded a decline in sales after several years of rapid growth. Musk had since said that Tesla was between two waves of growth. A few days ago the cuts were announced, which could cost more than 14,000 jobs. Due to weaker demand for its vehicles worldwide, more than one in ten jobs are to be cut.
This also has an impact on the plant near Berlin. According to a media report, the US electric car manufacturer also wants to shed 300 employees at its German location in Grünheide. Temporary workers will initially be affected by the job cuts starting on Monday. reported the digital business magazine “Business Insider” citing people familiar with the matter. Their access to the factory premises should be blocked when their employment contracts expire.