Tesla CEO Elon Musk Announces Stock-Based Compensation

Tesla CEO Elon Musk has informed employees that the electric vehicle (EV) manufacturer is developing a stock-based compensation plan for high-performing employees.

This announcement comes shortly after Musk secured shareholder approval for his $56 billion pay package, primarily composed of stock options, and two months following significant job cuts affecting over 10% of Tesla’s global workforce due to slowing EV demand and intensifying price competition from Chinese rivals.

Details of the Compensation Plan:

In an internal memo reviewed by two employees based in China and the U.S., Musk outlined the plan to provide stock option grants to employees who demonstrate exceptional performance.

The email, which was sent on Monday, stated:”Over the next few weeks, Tesla will be doing a comprehensive review to provide stock option grants for exceptional performance,” Musk said.

“There will also be an ongoing program to award spot option grants for anyone who does something outstanding for the company. Thanks for everything you’re doing to make Tesla successful.”

Context and Implications:

Tesla’s move to implement this compensation plan follows a challenging period for the company. Last year, according to sources familiar with the matter, Tesla did not distribute merit-based stock awards to employees. Aggressive price cuts have pressured the company’s financial performance to boost demand and counter competition, which has affected its margins.

Since the beginning of 2024, Tesla’s shares have declined by 25%, and the company has warned about a significant sales slowdown. The new stock-based compensation initiative appears to be a strategic effort to motivate and retain top talent during this turbulent time.

Tesla has not yet responded to a Reuters request for comment on this internal memo and the new compensation plan.