Tesla, a US-based automotive company owned by Elon Musk, will not be offering its annual merit-based equity awards to employees this year. The rationale behind this decision was not provided by the company, but insights from four employees across various departments, as reported by Bloomberg, suggest that the change is widespread.
Typically, during annual performance reviews, Tesla employees expect not only salary adjustments but also merit-based stock grants in addition to their existing equity. However, in 2023, even high-performing employees did not receive these merit-based grants, according to the statements of the employees.
Despite the absence of merit-based equity awards, employees did receive modest cost-of-living increases and adjustments to their base salaries. Moreover, several employees, reaching the end of their four-year vesting cycle, only received stock ‘refreshers’ to maintain competitive total compensation.
The company has a history of making changes to its worker compensation structure. Stock grants, particularly in the form of restricted stock units, have been a key tool for Tesla to keep overall pay levels high even while conserving cash. New employees typically receive a base salary along with stock grants that vest over four years, creating an incentive for long-term commitment.
A merit-based stock bonus is a form of compensation awarded to employees based on their individual performance and contributions to a company. Unlike standard bonuses, which may be predetermined or tied to company-wide performance, merit-based stock bonuses are specifically linked to the employee’s achievements.
This incentive aligns employee efforts with organisational goals, fostering motivation and retention. It often takes the form of additional shares or stock options, providing employees with a direct stake in the company’s success and encouraging long-term commitment.
