Dive Brief:

• Tesla CFO Vaibhav Taneja sold approximately $918,311 in in company stock Monday, according to a securities filing. The transaction marks the latest offloading of stock by the finance chief, who has repeatedly sold Tesla shares throughout the past year, including two separate sales in July with a total value of $1.7 million, CFO Dive previously reported. 
• Such sales send a “bad signal” for shareholders of the Austin, Texas-based electric vehicle maker, said Charles Elson, founding Director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Anytime you see a senior executive selling a lot of stock, it's never a particularly great sign for investors, because it suggests they have other places to put their assets that they feel will show greater appreciation than their own company,” Elson told CFO Dive. 
• The latest sale by the CFO comes as Tesla prepares for its coming 2025 annual shareholder meeting, to be held on Nov. 5, where shareholders are set to vote on several proposals related to compensation for the company’s executives. The company’s preliminary proxy filed on Sept. 5 with the Securities and Exchange Commission includes a proposal for a non-binding advisory or “say on pay” vote regarding 2024 compensation for its named executive officers and others. 

Dive Insight:

While non-binding, “say on pay” votes — which the SEC mandates must be held every three years by public entities — serve as a barometer regarding shareholders’ views of executive compensation, and failing votes can provide a strong signal of such to leadership and the company’s board. As of June 26, only five companies in the S&P 500 saw failing say on pay votes, according to a recent post on the Harvard Law School’s Forum for Corporate Governance.

Taneja — who took the CFO seat in 2023 — was one of the company’s most highly-paid executives for its fiscal 2024, receiving total compensation of $139 million which was largely composed of an equity award, CFO Dive previously reported.  

As well as the say on pay vote, the preliminary proxy also includes a proposal outlining a pay package for CEO Elon Musk, valued at approximately $1 trillion. During negotiations — Tesla’s special committee met with Musk 10 times to discuss the performance award, the preliminary proxy states — Musk “also raised the possibility that he may pursue other interests that may afford him greater influence if he did not receive such assurances,” the proxy states. “Ultimately, the Special Committee believed it to be critical to Tesla to secure Mr. Musk’s commitment and focus to lead Tesla.”

The package, among other incentives, would boost Musk’s ownership in the company to 25%, according to the proxy. In order to receive the full performance award, Musk is required to create approximately $7.5 trillion in shareholder value, the company said.

The EV maker’s compensation negotiations are occurring as Tesla’s stock valuation has continued to whipsaw over the past year in the face of declining profits, impacts on the EV market due to changing tariff policies and both consumer and investor backlash relating to Musk’s U.S. political activities. During the company’s Q2 earnings call in July, both Taneja and Musk warned of headwinds that could continue to buffet the company, including the ending of an EV tax credit and near-term challenges from tariffs, CFO Dive previously reported.

Tesla’s market share has also plummeted to an 8-year low in the face of rising competition, an aging lineup of EVs and ongoing financial and regulatory challenges, according to a Monday report by Reuters citing data from Cox Automotive. Sales of Tesla’s EVs accounted for 38% of total U.S. EV sales for the month of August — the first time that percentage has fallen below 40% since October 2017, according to preliminary data from Cox.

The EV maker has also seen sales continue to tumble in markets such as the European Union — declining by over 42% year-over-year in July, according to a report by the European Automobile Manufacturers’ Association.