“Don’t Be Bothered By Stock Market Craziness,” Elon Musk Tells Tesla Employees Despite Stock Compensation
Tesla (Nasdaq: TSLA), like most other tech businesses, includes stock options and grants in its remuneration packages. However, unlike most automakers, the company is providing equity pay to all employees across the corporation, including manufacturing colleagues and sales staff, which is unusual in the auto industry.
But, with the electric vehicle maker seeing the lowest share price it has in more than two years, employee shareholders are also taking the brunt of the crash along with the retail investors.
CEO Elon Musk last week sent a company-wide email telling employees to not concern themselves too much about the “stock market craziness.”
“Don’t be too bothered by stock market craziness. As we demonstrate continued excellent performance, the market will recognize that,” Musk said in the email, of which CNBC got a hold of a copy.
He added that he believers “very much that Tesla will be the most valuable company on Earth” in the long-run.
In 2022, Tesla lost close to 70% of its valuation, plummeting its market capitalization down to around $380 billion. These latest declines unseated the electric vehicle maker from the top 10 biggest US public firms based on market cap.
Musk has blamed rising interest rates as the reason for Tesla’s share price decline. However, detractors point to his Twitter acquisition and related antics as a greater reason for the decline, which has wiped off almost $675 billion in market capitalization.
However, the chief executive has made some gains personally, selling around $7.4 billion of his shares in just the past two months–coincidentally, the same period since he took over Twitter. Throughout the year Musk sold Tesla stock to the tune of nearly $40 billion.
The recent share sales have been particularly noteworthy after the CEO claimed before that no more “planned sales” will happen for the year.
READ: Tesla Wins In 2022, But Not For Its Investors
The declines in share price are affecting employees enrolled in Tesla’s Stock Purchase Plan (ESPP). The program is an optional benefit allowing employees to purchase company stock at a discount, payment of which is deducted from their compensation.
Twice a year, employees can choose to enroll and ask the company to deduct up to 15% of their gross pay monthly. The collected amount will be used to purchase Tesla stock at the end of the 6-month period based on a 15% discount on the share price–either based on the price at the first trading day of that period or the purchase date, whichever is lower.
In the last “offering period”–March 1 – August 31–employees enrolled in ESPP would’ve bought Tesla stocks at 15% of $275.61 per share (August 31 price). The value of those shares has now more than halved as the firm currently trades just above $120.
It is worth noting that in September, Tesla began awarding cash grants to employees as their default incentive to stay with the firm, rather than equity rewards. However, employees of the electric car manufacturer will still be able to get stock awards instead of cash grants if they desire, but cash will remain the default.
Given that around this time Tesla was still trading above $270, it would not be a surprise if most employees still enrolled in the stock compensation scheme. Employees are allowed to withdraw anytime during the offering period, after which their accumulated pay deductions would be refunded to them.
Further on Musk’s email to employees, the chief executive asked them to “volunteer to help deliver [Tesla cars] if at all possible” since there’s a “lot of cars arriving at the last minute.”
“Since we have a lot of cars arriving at the last minute, it is important to rally hard and do everything we can to get our cars to customers who have ordered them before midnight on Dec. 31. Also, every incremental car we produce that can be delivered in time also matters,” Musk wrote. “Please go all out for the next few days and volunteer to help deliver if at all possible. It will make a real difference!”
Tesla continues to face production hurdles–specifically at its Texas gigafactory–due to recruitment troubles and a problematic employer image. Comparatively, when the Berlin gigafactory first launched in March, the goal was to build 5,000 vehicles per week by the end of the year–even stretching this out to construct half a million Teslas in Berlin in 2022, as Musk told German media. However, it is far from meeting its objectives due to serious recruitment issues—the company has only hired 7,000 individuals out of a planned 12,000.
READ: Tesla Misses Berlin Gigafactory Production Target As Hiring Continues To Be A Problem
According to sources who told Electrek, Tesla informed its staff that it is adopting a recruiting freeze and has confirmed that another round of layoffs will occur in Q1 2023. The carmaker’s chief has provided different explanations for the layoffs to different persons, including that he has a “very bad feeling” about the economy.
The reported move comes after Musk told Tesla executives in June to “pause all hiring” and cut 10% of staff, only to reverse the decision and started growing the workforce again towards the second half of the year.
Just this November, results of an internal 2018 Tesla worker survey disclosed in the ongoing lawsuit against Musk related to a nearly $56 billion compensation package at the carmaker company. Then-chief people officer, Gabrielle Toledano, sent the survey to board member Ira Ehrenpreis, who chairs the company’s remuneration committee. She cited two significant issues raised by employees in her email: worries about salary and leadership at Tesla, notably around Elon Musk.
“Review of employee survey results,” Toledano said in the email. “Not good on [compensation, especially] from VPs, and not good on leadership, mostly about Elon.”
Information for this briefing was found via CNBC, The Information, Electrek, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
