Tesla explains the strategy for the share split of 3: 1

Tesla announced yesterday that they plan to implement a share split of 3: 1 once after the shareholders’ meeting on 4 August. The last share split, which took place in August 2020, made shares cheaper for young investors and private investors after the car manufacturer’s share price had increased. to $ 2,2213.40.

But the company’s purpose with the 3: 1 share split is a little different, and is more focused on employees, according to Tesla’s 14A filing to the SEC, which was filed yesterday.

Tesla said that the next share split “would help to reset the market price of our ordinary shares so that our employees will have more flexibility in managing their equity, which in our view can help maximize shareholder value. In addition, as retail investors have expressed great interest in investing in our share, we believe that the share split will also make our ordinary shares more accessible to our retail shareholders. “

Tesla is among the most attractive places to work due to its employees’ equity programs, which include the Employee Stock Purchase Plan (ESPP). This allows Tesla employees to buy shares in the company at a discounted price. Tesla knows that their benefit packages are a great way to attract advanced talent to their programs, and a share split was undoubtedly a way it could rejuvenate the benefit package.

“Our success depends on attracting and retaining excellent talent, not only by offering a respectful, safe, inclusive and fair workplace, but also by offering outstanding benefits and highly competitive compensation packages. Unlike other manufacturers, we offer all employees the opportunity to receive equity, “said Tesla.” Since our share split in August 2020 to June 6, 2022, our share price has risen 43.5%. Although this increase in value has led to our employees have benefited enormously over the years, we want to ensure that all employees, regardless of when they join, have access to the same benefits.We believe the share split will help to reset the market price of our ordinary shares, so that our employees will have more flexibility in the management of equity, which in our view can help maximize shareholder value. “

Retail investors should not worry, Tesla still kept them in mind when they announced the 3: 1 split. “In addition, as retail investors have expressed a high level of interest in investing in our stock, we believe that the share split will also make our ordinary shares more accessible to our retail shareholders,” Tesla said in the archive.

Disclosure: Joey Klender is a TSLA shareholder.

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Tesla explains the strategy for the share split of 3: 1