Tesla managers reportedly informed some salaried employees about a rather unpleasant surprise this week — there will be no merit-based equity awards for 2023.
Despite the update, Tesla employees will still receive cost-of-living increases and adjustments to their base pay, as per a report from Bloomberg News. The publication cited four Tesla workers who work in different departments within the company as its source of information.
Typically, Tesla employees receive salary adjustments and merit-based stock grants during their annual performance reviews. This year, the merit-based stock grants were reportedly not given, though employees who reached the end of their four-year vesting cycle in the company were still issued stock “refreshers.”
The alleged halt in Tesla’s merit-based stock awards this year stands in contrast to the company’s typical approach to employee compensation. The company heavily leverages equity awards, particularly merit-based grants, to incentivize talent and encourage long-term commitment. These grants typically vest over four years, effectively binding employees to Tesla’s future success and fostering loyalty.
Tesla’s stock grants are potentially among the reasons why the company attracts a generous number of applicants per year. As per CEO Elon Musk, numerous Tesla workers have already become millionaires. Granted, such milestones were achieved via stock grants, but the CEO’s comments only highlight how much value Tesla puts in equity awards.
The UAW stole millions from workers, whereas Tesla has made many workers millionaires (via stock grants). Subtle, but important difference.
— Elon Musk (@elonmusk) March 29, 2022
“The challenge is: How do we retain great people to do the hard work of building cars when they have, like, six other opportunities that they can do that are easier? We certainly try hard to ensure the prosperity of everyone. We give everyone stock options,” Musk said during the New York Times DealBook Summit last month.
The reasons behind Tesla’s apparent shift away from merit-based stock awards this year remain unclear, at least for now. That being said, CEO Elon Musk has previously expressed concerns about macro factors in the global economy, as well as high interest rates from the US Federal Reserve. Tesla may also be updating its approach to awarding stock to its employees.
Tesla, for its part, has not issued a comment about the matter.
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