Cutting expenses? Reports suggest that Tesla will skip employee performance stock incentives.
For most of 2023, Tesla has expressed concerns about the global economy, and the CFO of Tesla has also stated that the company is focusing on cost-cutting measures to cope with the challenging economic environment.
Global economic prospects are challenging, and Tesla plans to cancel performance-based stock incentives this year to reduce expenses?
According to media reports on Wednesday, Tesla executives have informed some employees that the company will not provide them with performance-based stock incentives this year. Tesla has not given specific reasons for this change.
According to four employees from different departments, this decision may be implemented on a large scale. However, the cost of living allowance for employees will still increase moderately, and the base salary will also be adjusted. Tesla has 140,000 employees worldwide.
In Tesla's annual performance evaluation, employees usually receive salary adjustments and performance-based stock rewards based on existing equity. However, even outstanding employees this year will not receive performance-based incentives. However, Tesla employees who have reached the four-year stock vesting period will still receive stock "refreshes" to keep their total compensation competitive in the industry.
It is currently unclear whether this is an isolated incident or whether Tesla's compensation system is undergoing a larger transformation, namely adopting a more targeted approach to equity grants. Musk has long emphasized the importance of employee ownership and stated at the DealBook summit last month:
"The challenge is how do we retain great talent and get them to do the hard work of making cars. We will strive to ensure that everyone has an advantage in compensation, so we give everyone stock or stock options."
It is worth mentioning that for most of 2023, Musk has expressed concerns about the global economy. 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 high interest rates have suppressed car demand. Tesla's CFO Vaibhav Taneja also stated that the company is focused on cost-cutting to cope with the "challenging economic environment".