tesla alters employee compensation strategy
Tesla, an American multinational automotive and clean energy company, has altered employee compensation strategy. The company has informed salaried employees that they will not be getting merit-based equity awards this year.
According to a Bloomberg report, Tesla workers did receive modest cost-of-living increases and adjustments to their base salaries even after the absence of merit-based stock grants.
The alteration in compensation comes amid Tesla’s CEO Elon Musk’s concerns about retaining talented employees in a competitive job market were voiced at the New York Times DealBook Summit.
What to expect?
Tesla managers have informed some salaried employees that the company will not be offering merit-based equity awards this year. However, Tesla didn’t give a reason for the change.
Every year, Tesla employees get salary adjustments as well as merit-based stock grants on top of their existing equity. However, this year, even high performers didn’t get the merit-based grants.
Tesla, which has 140,000 employees globally, did not provide any reason for the change. Tesla CEO and the world’s richest person, Elon Musk, has always been vocal about his concerns regarding high-interest rates amid inflation.
It is still not known if the change is a part of a larger shift in Tesla’s compensation philosophy.
Equity awards have always motivated Tesla workers to stick with Tesla over other companies. New employees are offered a base salary and stock grants that vest over four years.
Tesla is also set to raise pay for the set-rate hourly workers in January. The pay for hourly workers will be increased from $20 to $22 an hour on the low end starting early January.
Last month, Tesla announced wage increase for German workers. The company announced a 4% wage raise for German workers amid union pressure. Tesla management in Germany informed workers that they would receive a 4% wage raise.
In October, Tesla workers’ strike was held in Sweden after the company refused to sign a collective wage agreement. Tesla workers in Sweden said that they had “lower wages.” Elon Musk must conduct negotiations with Tesla workers in Sweden on a collective agreement.