Behind the Numbers: Musk Pay Package Up for Discussion While Tesla Cuts Jobs Amidst Sales Concerns

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Behind the Numbers

Musk Pay Up for Discussion, While Tesla Cuts Jobs Amidst Sales Concerns

We’re doing something a little different this week at Climate Money Work Newsletter. We’re kicking things off with our “Behind the Numbers” segment!

Today, Telsa announced plans to ask shareholders to vote - once again- on the pay of CEO Elon Musk during their June annual meeting. Recall, a judge voided the package earlier this year calling the $56 billion amount “unfathomable.” Will the vote cancel out the judge’s earlier ruling? Well, this does comes at quite an interesting time. Just weeks after Rivian's market performance came in slightly below expectations and discussions arose regarding consumers' inclinations toward hybrid vehicles, the electric vehicle (EV) landscape faces further disruption, this time involving Tesla.

Tesla announced a reduction in its workforce, with approximately 14,000 jobs being cut. This decision comes along with the departure of two top executives, Drew Baglino, the senior vice president of powertrain and energy, and Rohan Patel, the head of policy and business development, both of whom held significant roles for multiple years. With first-quarter earnings set to be disclosed later this month, projections indicate a decline in sales figures compared to the previous quarter. This decline coincides with heightened competition in the EV market, posing additional challenges for Tesla in the near future.

Sources:

• Tesla Plans to Lay Off More Than 10% of Workforce - WSJ

• Tesla asks shareholders to approve CEO Musk's 2018 pay voided by judge | Reuters

Sustainability in the Built Environment  

Green buildings are not a passing trend. Investors are actively seeking opportunities to leverage the shift towards operational and cost efficiencies. Consumer demand for both commercial and residential real estate grounded in sustainability principles continues to grow. 

Climate issues left an indelible mark on the real estate industry, prompting a heightened interest in green buildings and sustainable real estate more broadly, While renewable energy sources have long been focal points for climate-conscious investors, real assets, despite their substantial environmental and social impact, previously escaped comparable scrutiny. 

A noteworthy statistic from the Environmental and Energy Study Institute highlights that buildings nationwide contribute to 40 percent of the country's carbon emissions, primarily due to the use of fossil fuels and propane in heaters and furnaces within the real estate sector. This underscores the urgent need for a more comprehensive approach to sustainability considerations within the real estate industry. 

As sustainability becomes an integral factor in real estate decision-making, investors and stakeholders alike are presented with a unique opportunity to contribute to a more environmentally and socially responsible future. 

Stay tuned for Climate Money Work Podcast’s deep dive into the intersection of buildings and climate!

Sources:

• https://angeles.sierraclub.org/climate_action_team

CRO Chronicles : Nejad Arash, CRO Novarc Technologies

This week’s CRO Chronicles features Arash Nejad. Arash is Chief Revenue Officer at Novarc Technologies, where they focus on revolutionizing manufacturing processes with advanced automation which is proving to be a productivity game changer in the welding industry.  

Climate Money Work: How do you approach commercial policy versus sales? I'm assuming a CRO has a very broad remit and that includes commercials and sales. So where do you focus? Do you focus on both or what's your primary area? 

Arash Nejad: As a CRO, financially speaking I work on anything related to the top-line, revenue. While I’m keeping a close eye on margins and looking for ways to improve them, I don’t let profitability distract me in a high growth business as other leaders in the business are focused on it.  

Before any commercial activity there has to be a strategy. 

To design a strategy, I typically work backwards. I look for the CEO and the board's vision and understand where they want to be in five or ten years’ time. Then I determine possible paths to achieve their vision and some key questions must be answered. What products and services do we need? What markets do we need? What commercial tools do we need? What channels? What teams do I need? What should the structure look like? Who and how to compete with existing companies? Those are all strategic questions that a CRO must answer before executing.  

Let’s not forget that you could design the best strategy on the planet, but if you can't execute it, you’re just hallucinating.  

CMW: Do you approach a certain type of client or partnership with a certain type of commercial approach in mind? 

AN: The best way to describe my own strategy is to  “go outside in.”  Regardless of what the companies used to do, the question is “What does the customer want?”  

Some companies assign an empty chair in every meeting. And they say, imagine if the customer was sitting right there in that chair. That is the kind of mentality that I try to bring in. Depending on the different customers’ needs, I may adjust what I do. There's no perfect answer for this because customers’ needs are different. It's impossible to have a general brush to say all customers want a direct relationship versus all customers want a distribution relationship. 

CMW: Tell me about a primary challenge you’re seeing across the board for customers. 

AN: Let’s look at heavy industrial customers. They are losing domain experts at an accelerated pace. There used to be a generation that did the same thing over and over for decades. The new generation are coming in and are switching jobs every 1 or 2 years, and so they aren’t spending enough time to learn the intricate tasks from the previous generation who held their jobs for 40 years. 

This is where AI and automation come to help. They provide supportive tools so a human doesn’t have to take several years to master a craft and can instead focus on non-repetitive high level tasks. For example, in welding, AI enabled welding automation can help a new and eager welder weld very difficult alloys in a safer and more productive manner in a matter of months versus years in the past. 

CMW: How has sustainability played a role in revenue generation? Share with us the role of AI as that is key to your work. 

AN: When it comes to welding and ESG, the main focus is on safety. There are also ESG metrics related to minimizing welding gases, energy and metal usage but safety of the welder is forefront in many countries. Welders put on a hood, get close to dangerous machines, and hunch their backs into difficult positions for several hours a day. Then they begin melting metal with gases and chemicals surrounding the process to make sure the weld creates the best bond. Add the blinding light from the arc and we wonder why there is a massive shortage of welders. AI and automation as previously noted can help. Novarc’s robotic solution moves the welder away from the danger and into a healthy posture while welding much faster and with less errors. Our aim is to further the AI capability so that the welder can start the process and walk away to perform other productive tasks. 

CMW: So that’s the messaging around how your solution supports human safety. 

AN: That's it. We take the best welder and multiply that welder by four, and in the case of certain difficult alloys by twelve. Our other advantage is using cobots vs. robots which are designed to work next to humans. This is perfect for welding different materials and sizes at a low volume such as pipe fabrication. 

CMW: Who do you depend on to support your CRO work? 

AN: A CRO designs strategies that go one, three, five, ten years out. And that entails understanding the market, the customer trends, competitors and the company and its own goals. CROs need the support of everyone in the company. Given their difficult task of strategizing growth as well as executing the plans, a CRO appreciates deputies and supports those who have both strategy and tactical acumen. 

CMW: And what does that strategy look like? When you're thinking about building out a one-, five-, and ten-year strategy, what are those top three questions that need to be asked? 

AN: Great question. Top three questions in my mind would be : 
1) What latent or unarticulated customer needs might emerge over the long term? In essence, what future requirements could customers have? 

2) How will competitive forces and emerging technologies influence our current product's value proposition? 

3) Is our team and company structure and finances sufficiently flexible and adaptable to withstand risks, foster growth, and compete effectively? 

Thanks for joining us this week. Please send questions, feedback, and pitches to [email protected] or just hit reply to this email.

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