Tesla cancels performance-based stock rewards, reasons undisclosed
Tesla has cancelled performance-based stock rewards, and the reason has not been disclosed. The cost of living and wages for Tesla employees are both increasing. Tesla CEO, Tesla, stated that stocks are an important component of employee compensation. Senior management at Tesla revealed that performance-based stock rewards will not be offered this year, and employees have reported that even outstanding performers did not receive bonuses. Tesla has made multiple changes to the compensation method for employee bonuses in the past. The stock rewards at Tesla are aimed at retaining outstanding talent and countering union wage pressures. Tesla did not respond to inquiries from reporters.
Zhitong App learned that according to media reports, senior executives of Tesla (TSLA.US), the global leader in electric vehicles, have informed some salaried employees that the company will not provide performance-based stock rewards this year. The specific reason for this change has not been given by the company, but media reports suggest that this is common at Tesla, according to four informed employees from different departments. The cost of living for Tesla workers is still showing a moderate upward trend, but their basic wages have also been adjusted accordingly, with the adjustment range being relatively optimistic, according to the informed employees.
During the annual performance evaluation period, employees usually receive salary adjustments and additional stock rewards based on performance on top of their existing stocks. However, some Tesla employees have stated that this year, even outstanding employees did not receive various forms of performance-based bonuses. Some Tesla employees who have reached the end of the four-year stock grant cycle will still receive stock "refreshes" to keep their total compensation competitive.
It is currently unclear whether this is an exceptional phenomenon or a greater shift in Tesla's compensation philosophy, specifically adopting a more targeted approach to stock grants. Tesla, which has 140,000 employees worldwide, did not respond to inquiries from reporters. The company has made multiple changes in the past to the way it compensates employees for bonuses.
Tesla CEO Elon Musk has long emphasized the importance of employee ownership. The widespread distribution of these stock rewards has allowed the electric vehicle manufacturer to maintain a high total compensation while retaining cash, and Musk believes that this compensation method helps him resist the significant wage pressure brought by unions.
"The challenge we face is: how do we retain excellent talent and keep them engaged in the difficult work of manufacturing cars when they have other easier job options?" Musk said at a summit last month. "We will certainly strive to ensure that everyone's wages prosper. So we give everyone stocks or stock options."
Stock rewards typically come in the form of restricted stock units, and historically, this type of reward has incentivized employees to stay at Tesla rather than go to competitors. New employees typically receive a base salary and a four-year stock reward, which means that if they leave the electric vehicle manufacturer in a short period of time, they may sacrifice a significant amount of compensation.
As the world's richest person, Elon Musk has expressed concerns about the global economy for most of 2023. He has repeatedly publicly criticized the Federal Reserve for maintaining a high-interest-rate policy and warned during Tesla's third-quarter earnings conference call that commercial real estate is in a "bad state," credit card debt is rising, and high interest rates are suppressing car demand. "I want to emphasize that the majority of people buy cars on a monthly payment basis. If interest rates remain high for a long time, or even higher, demand will certainly weaken," Musk said at the Tesla earnings conference.
Tesla CFO Vaibhav Taneja also stated during the earnings conference call that the company is focused on cost-cutting to cope with the "challenging economic environment." Global investors' extreme optimism about artificial intelligence (AI) has completely overshadowed concerns about the impact of the Federal Reserve's interest rate hike in 2023. With the global companies actively embracing the trend of generative AI, investors have high expectations for the technology industry. This AI frenzy has directly driven investors to flock to the seven tech giants in the US stock market, partly because they are betting on the fact that these tech giants, with their massive market size and financial strength, are in the best position to leverage AI technology to expand their revenue. Tesla, one of the seven tech giants, has seen its stock price rise by 108% this year.
