Tesla Inc. is reportedly not offering performance-based stock incentives to some of its employees this year, a move that appears to be part of the company's efforts to reduce expenses amid challenging global economic conditions.
According to reports on Wednesday, Tesla executives informed several employees that the company would not be providing them with performance-based stock incentives this year. The specific reasons for this change were not disclosed by Tesla.
Four employees from different departments indicated that this decision might be implemented on a larger scale. Despite this, employees can expect a moderate increase in cost-of-living allowances and adjustments to their base salaries. Tesla employs approximately 140,000 people worldwide.
In Tesla's annual performance reviews, employees typically receive salary adjustments and performance-based stock awards on top of their existing equity. However, this year, even high-performing employees did not receive performance-based incentives. Employees who have reached the four-year vesting period for their Tesla stock will still receive stock "refreshers" to keep their total compensation competitive in the industry.
It remains unclear whether this is an isolated incident or a larger shift in Tesla's compensation system, particularly in terms of a more targeted approach to equity grants. CEO Elon Musk has long emphasized the importance of employee stock ownership. Last month at the DealBook summit, Musk highlighted the challenge of retaining top talent in the demanding field of car manufacturing, stating that Tesla strives to ensure competitive salaries by offering stock or stock options to everyone.
It's noteworthy that for most of 2023, Musk has expressed concerns about the global economy. He has repeatedly criticized the Federal Reserve's high-interest rate policy and warned during Tesla's third-quarter earnings call that high rates are suppressing car demand. Tesla's Chief Financial Officer, Vaibhav Taneja, mentioned that the company is focusing on cutting costs to navigate the "challenging economic environment."
