Tesla Inc. has recently made a decision that has raised eyebrows among its employees. According to Bloomberg News, the company has informed some of its workers that merit-based stock grants will no longer be included as part of their overall compensation this year. This means that even the top performers will not receive the stock awards that they have come to expect.
Stock grants have long been a way for Tesla to attract and retain talented individuals. By including equity as part of their salary packages, the electric-vehicle maker has been able to stay competitive in the job market. However, this new development suggests a change in approach. The grants typically take four years to fully vest, making them a valuable long-term incentive for employees. But now, it seems that these benefits will no longer be a part of the compensation package.
The news comes shortly after reports indicating that Tesla plans to raise hourly wages for most of its workers at the Nevada gigafactory by approximately 10% starting next year. While this may be seen as a positive move by some, the removal of stock grants may leave employees feeling uncertain about their future at the company.
Despite this latest development, Tesla’s stock performance has remained strong. In fact, it is part of a group known as the Magnificent Seven, which includes other tech stocks that have been favored by investors this year. Despite an earnings miss in the third quarter and lowered expectations for the Cybertruck, Tesla’s stock has climbed an impressive 108%. This marks its best performance since a remarkable 743% surge in 2020.
It is worth noting that just a year ago, CEO Elon Musk was trying to rally employees amidst a weak stock performance. The stock had dropped 65% in 2022, causing concern among investors. However, Musk reassured his team not to worry too much about the stock’s volatility.
During a recent call with analysts, Musk expressed his concerns about the challenges facing the consumer market. One such challenge is the high interest rate environment, which he believes could impact car sales. Musk emphasized that for the majority of people, the affordability of a car is heavily influenced by the monthly payment. As interest rates rise, the portion of that payment attributed to interest increases, making it more difficult for people to afford a new vehicle.
It remains unclear why Tesla has made this decision regarding stock grants for employees or how it will be received by the workforce. As of now, Tesla has not issued a public statement regarding this matter.
