In an internal memo to employees on Monday, 17 June 2024, Tesla revealed plans to introduce stock-based compensation for high-performing employees. Over the next few weeks, the company will be conducting a comprehensive review to grant stock options for exceptional performance.
This initiative is set to roll out just days after Elon Musk, CEO, Tesla, secured shareholder approval for his own $56 billion pay package comprising stock options two months post significant job cuts impacting over 10 per cent of Tesla’s global workforce.
This move to incentivise employees comes after Tesla skipped merit-based stock awards last year, according to sources familiar with the situation. The company’s margins were pressured by aggressive price cuts intended to stimulate demand and counteract competition from Chinese electric vehicle manufacturers.
Reportedly, there will also be an ongoing programme to award spot option grants for anyone who does something outstanding for the company. However, the company is yet to confirm on the said programme.
Tesla shares have declined by 25 per cent since the beginning of 2024. The company has also issued warnings about a significant slowdown in sales, reflecting the broader challenges in the electric vehicle market.
Tesla has undergone significant changes recently, transitioning from its Silicon Valley roots to explore ventures beyond electric vehicles, such as artificial intelligence and robotics. This shift has contributed to a decline in employee morale, with some workers expressing concern that Musk’s focus on projects such as a robotaxi is overshadowing the core business of EV manufacturing. The lack of clarity from Musk on the subject of layoffs has only heightened employee anxiety.
As Tesla navigates these turbulent times, Musk’s latest strategy aims to boost morale and retain top talent by aligning employee rewards with the company’s long-term performance.
