Tesla Delays Another Employee Pay Adjustment As Elon Musk Demands Another Pay Bump

Tesla (NASDAQ: TSLA) is grappling with employee dissatisfaction as it delays a second pay adjustment while CEO Elon Musk demands a substantial pay package. The electric vehicle (EV) manufacturer initially announced annual wage increases following routine reviews, but not all employees were pleased with the adjustments.

Salaried employees were informed that their regular stock compensation would not be granted after annual reviews, and hourly employees faced increases below expectations, aggravated by the current high inflation environment. Some Tesla workers expressed their concerns, citing the impact on morale and the departure of high performers to competitors offering more lucrative pay.

In response to the discontent, Tesla communicated a commitment to conduct another pay adjustment. In an email to employees on January 1st, the company stated, “Thank you for sharing your feedback on the recent pay adjustments. We value your feedback and have decided to do another comprehensive review of our variable rate pay bands and the increases that were provided to ensure we get it right.”

However, the January 15 deadline for the updated pay adjustments passed without implementation. Hourly employees were notified that a “market review” would necessitate an additional two weeks before any changes were finalized.

Musk wants double

Tesla’s struggle with employee compensation coincides with Elon Musk’s negotiation for a substantial increase in his ownership stake in the company. Musk, already the world’s richest person, is seeking 25% voting power, essentially doubling his current 13% ownership. The CEO’s ultimatum suggests a potential shift in focus toward his new startup, xAI, if the demand isn’t met.

“Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to build products outside of Tesla,” Musk said on X (fka Twitter).

The situation raises concerns about Musk’s influence on Tesla’s strategic direction, especially as he emphasizes the company’s role as an AI/robotics leader. Musk’s warning of developing AI and robotics outside Tesla without increased voting control has sparked governance experts and analysts to question the potential conflict of interest and its impact on the company’s valuation.

Musk’s insistence on a higher ownership percentage is not the first of its kind, as his previous compensation package in 2018 faced shareholder scrutiny. A pending Delaware Chancery Court ruling will determine whether the compensation was excessive, and Musk suggests that this ruling will influence his decision on a new compensation plan.

Analysts speculate that Musk’s recent statements may raise the likelihood of his departure as CEO or a compromise involving shares, potentially diluting investor holdings. Tesla, known for its leadership in electric vehicles, is facing increased competition, and Musk’s focus on AI and robotics as the company’s future direction adds a layer of uncertainty for investors.


Information for this briefing was found via Reuters, CNN, Elektrek, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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