UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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SCHEDULE 14A
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Tesla, Inc.
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On June 7, 2024, Elon Musk posted the following on X.
Transcript of video in post:
Cathie Wood: The first, is that, I'd argue, that no other executive that I'm aware of in history has been more aligned with shareholders than Elon Musk. Elon committed to no salary, no bonus, no stock comp for 10 years unless he […] created tremendous value for shareholders, for Tesla shareholders. And what that usually means, this is not all about shareholders. That usually means creating goods and services that consumers love and that make their lives a […] better place, and then doing so surrounded by really good business […] partners, and that's what we think Elon has done.
Now, one thing that people do not understand, and this is important, is that Elon Musk will not be able to cash in on his options, should he be able to exercise them, until five years after exercising them. So, what that would mean is that Elon probably would stay at Tesla for the next five years, which is going to be a crucial period in terms of ramping and gaining traction on the autonomous taxi platform opportunity. So, that we think is very important.
Now, what were the odds that Elon Musk would hit the goals included in his comp package? And for those who don't know, it was a comp package that included 12 tranches, […] each with market cap revenue and EBITDA earnings before interest, taxes, depreciation and amortization, milestones. But the very first milestone back in 2018 when the stock was suffering so much, was that the stock had to double before Elon could get any pay whatsoever. So, we […] believed, and Tasha Keeney and Sam Korus did all the research to support this. We believed that Elon could hit the goals in his comp package only with brilliant execution.
But most analysts, most auto manufacturers, and most people in the media, thought these targets were laughable. They didn't think they were possible at all back then. And in fact, this was 2018 and then 19’, when Tesla was scaling the Model-3 through what Elon Musk called “production hell,” analysts and media pundits peppered their narratives with the word bankruptcy. In fact, […]Morgan Stanley, at the time, put out a bear case for Tesla with a target price of $1. Now, obviously, that forecast was completely wrong. In fact, Tesla, the stock price, shot up to $414 in 2022, so that was a massive scaling as Tesla hit one milestone after another in Elon's pay package.
[…] What the company had done was compound revenues at a 49% annualized growth rate. So, 49% on average per year. Adjusted EBITDA, 142% on average per year. So, profitability increased as Tesla was scaling and market cap at 91% on average per year from early 2018 to mid 22’ when it hit that peak. And even in the last few years, after interest rates have soared 24 fold and Chinese price competition has become ferocious, Tesla is still at, in somewhere in the $175 to $180 range, which was a far cry from where we started. I believe we were below $20, or roughly around $20 at the start of that journey. So, $20 to $414 and even today, after a correction based on macro fundamentals, we're still at that $175-$180 level.
Now what about this $56 billion pay package? That does sound extreme, I guess. Well, it sounds extreme. Now, as Tesla noted at the outset, the accounting fair value of the award in 2018 would have been about $2.3 billion. Why did it get to $56 billion? Well, the size of the award grew in proportion to the value that Tesla created for shareholders. So, from $2.3 billion to $56 billion. Now for perspective, just to put that 2.3 billion into perspective, this is what the board of directors were considering in 2018. For perspective, GM and Ford, each of them, spent $4 billion on advertising in just one year, 2018.
Elon Musk is Tesla's best salesman. He is the best advertisement for Tesla. Tesla has never paid for advertising until very recently, certainly not in 2018, 19', 20', 21', 22'. That five year period, Tesla did not advertise, and Ford and GM each spent $4 billion. So, Tesla's or Elon's pay package at $2.3 billion was […] less than the advertising budget that Tesla would have had to have spent, if GM and Ford are any indication, were Elon Musk not the advertising platform himself for Tesla.
Now, Elon has not been the sole winner in all of this. Employees, so Tesla's, I believe all of Tesla's employees own stock. They have been […] big winners as have all other shareholders. And you know, board members at the time, if I were in their position, I would be thinking both sides of this thing. Okay, maxed out, this would be a big payday for Elon Musk, but if he had failed, if he had failed, he would have received no comp over five to 10 years and no payout in terms of […] options. But, Elon did not fail. In fact, he succeeded spectacularly, and he should be rewarded accordingly.
He did what most certainly analysts and executives in the auto industry and even in the tech industry thought was, would be impossible. Now, if shareholders renege on Elon Musk's pay package after 73% of the shareholders in 2018 did vote for it, and that was before that all of the risks were diffused, then the public equity market we believe is going to lose access to really innovative and creative companies like Tesla who want to reward their visionaries and their leaders with pay packages commensurate with what they've accomplished.
How can shareholders renege on his pay package after Elon and […] shareholders like us and others who were holding the stock in 2018, have already taken and overcome the risks of production hell […] and the risks associated with Tesla actually now producing the best-selling car in the world, the model Y. We do not understand. In fact, we would say reneging on that agreement is unconscionable.
On June 8, 2024, Elon Musk posted the following on X.
Transcript of video in post:
John Stringer: Old Wall Street analysts don’t get it. From his perspective I think he just thought that retail investors are very forward thinking. They’re gonna step out of the box and see like what’s the reality.
On June 8, 2024, Martin Viecha posted the following on X.
On June 9, 2024, Elon Musk posted the following on X.
On June 10, 2024, Tesla, Inc. ("Tesla") posted the following on X.
Transcript of video in post:
Sorkin: [...] been working mightily hard over the past couple of weeks, talking to shareholders from around the country, big institutions and others, and this is an opportunity to talk to […] retail shareholders about what is going on at Tesla and about this pay package. We've been debating this pay package virtually every day now for weeks, if not months. I've been very outspoken. I think a lot of people know my own views about it, but I want to understand your views about it, and not just your views as the lead of the board, but also personally […] how you think about what is going on right now.
Denholm: Yeah. So I think […] for me, getting out and talking to shareholders is really important, and today is a great opportunity to actually speak directly to retail shareholders, who [...] form quite a big part of the ownership structure of the company. And so for me, the […] ratification of the pay package is really about fairness. Fairness to our CEO, if you look at what's happened at the company over the last six years, tremendous value creation, and he's led that.
Sorkin: Right.
Denholm: Obviously, the Tesla team has been instrumental in it, but if you sit back, shareholders have benefited tremendously. Over $730 billion of value creation. Employees [...] have benefited tremendously. They're all shareholders in the company, so their stock has [...] risen. Customers have benefited by the tremendous innovation, and the only person who hasn't been paid is actually the leader of the company, Elon.
Sorkin: So, you know, my view, I believe a contract is a contract, but there are others who say, and by the way, the court has suggested, that this is just too much money. What do you say to that?
Denholm: Well, it's not about the dollars. It's actually about someone who took a huge [...] risk from a pay perspective, no compensation would have been awarded had he not […] hit the milestones. And so for me, that […] risk reward is […] very important in corporate America. I think it's very important from a […] reaching for the stars, if you like, or Mars in this case. But […] to me, it's about really setting things up. And Elon embodies that. And so, big, ambitious goals are things that drive innovation. And I think the […] options underneath this pay package are very well earned.
On June 10, 2024, Tesla updated its website, www.VoteTesla.com. A copy of the updated materials, other than those previously filed, is included below.
Additional Information and Where to Find It
Tesla, Inc. (“Tesla”) has filed with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement on Schedule 14A with respect to its solicitation of proxies for Tesla’s 2024 annual meeting (the “Definitive Proxy Statement”). The Definitive Proxy Statement contains important information about the matters to be voted on at the 2024 annual meeting. STOCKHOLDERS OF TESLA ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT TESLA HAS FILED OR WILL FILE WITH THE SEC BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT TESLA AND THE MATTERS TO BE VOTED ON AT THE 2024 ANNUAL MEETING. Stockholders are able to obtain free copies of these documents and other documents filed with the SEC by Tesla through the website maintained by the SEC at www.sec.gov. In addition, stockholders are able to obtain free copies of these documents from Tesla by contacting Tesla’s Investor Relations by e-mail at ir@tesla.com, or by going to Tesla’s Investor Relations page on its website at ir.tesla.com.
Participants in the Solicitation
The directors and executive officers of Tesla may be deemed to be participants in the solicitation of proxies from the stockholders of Tesla in connection with 2024 annual meeting. Information regarding the interests of participants in the solicitation of proxies in respect of the 2024 annual meeting is included in the Definitive Proxy Statement.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 reflecting Tesla’s current expectations that involve risks and uncertainties. These forward-looking statements include, but are not limited to, statements concerning its goals, commitments, strategies and mission, its plans and expectations regarding the proposed redomestication of Tesla from Delaware to Texas (the “Texas Redomestication”) and the ratification of Tesla’s 2018 CEO pay package (the “Ratification”), expectations regarding the future of litigation in Texas, including the expectations and timing related to the Texas business court, expectations regarding the continued CEO innovation and incentivization under the Ratification, potential benefits, implications, risks or costs or tax effects, costs savings or other related implications associated with the Texas Redomestication or the Ratification, expectations about stockholder intentions, views and reactions, the avoidance of uncertainty regarding CEO compensation through the Ratification, the ability to avoid future judicial or other criticism through the Ratification, its future financial position, expected cost or charge reductions, its executive compensation program, expectations regarding demand and acceptance for its technologies, growth opportunities and trends in the markets in which we operate, prospects and plans and objectives of management. The words “anticipates,” “believes,” “continues,” “could,” “design,” “drive,” “estimates,” “expects,” “future,” “goals,” “intends,” “likely,” “may,” “plans,” “potential,” “seek,” “sets,” “shall,” “spearheads,” “spurring,” “should,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Tesla may not actually achieve the plans, intentions or expectations disclosed in its forward-looking statements and you should not place undue reliance on Tesla’s forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause Tesla’s actual results to differ materially from those in the forward-looking statements, including, without limitation, risks related to the Texas Redomestication and the Ratification and the risks set forth in Part I, Item 1A, “Risk Factors” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and that are otherwise described or updated from time to time in Tesla’s other filings with the SEC. The discussion of such risks is not an indication that any such risks have occurred at the time of this filing. Tesla disclaims any obligation to update any forward-looking statement contained in this document.
