The electric carmaker is skipping its employee’s yearly merit-based stock compensations. Four salaried employees from different departments told Bloomberg News that Tesla managers informed them this year that they would not receive the annual equity grants usually given to top performers. The Company did not explain the change or say how many employees were affected. In previous years, the Company has offered these awards alongside salary adjustments. The equity takes about four years to vest fully, meaning workers must stay on the job to get any value from them.
The report comes as Tesla faces labor unrest at its service and collision repair centers, where workers have been striking since late October to press for better working conditions. The Company has not yet responded to a request for comment on the unrest. Its refusal to let workers unionize has set off a new wave of organized labor activity in the auto industry. The United Auto Workers union said in November it is launching a first-of-its-kind push to publicly organize the entire nonunion auto sector in the U.S., including Tesla, after winning new contracts with the Detroit Three automakers.
Despite the turmoil, Tesla stock has surged this year. It is up 108% in 2019, even after some tamping down expectations on the Cybertruck and the third-quarter earnings miss that sent shares diving after the results. It is also the best-performing stock in the S&P 500 index.
Tesla has said it will eliminate the future payment of cash retainer amounts to Board members and committee chairs beginning in 2020, citing a desire in its leadership role to have all of the Board’s compensation entirely at risk and aligned with stockholder interests. The Company will still pay for attendance, travel, and lodging for Board and committee meetings.
It will also report on the number of securities underlying outstanding options, stock awards, warrants, and rights granted to executives and directors during 2019. The Company must include in these disclosures the total realizable value of CEO Musk’s past option grants for performance periods that still need to be fully vested. These options grant terms were designed to be met by Tesla’s achievement of a combination of operational milestones, aggregate vehicle production and gross margin targets, and a sustained incremental increase in the Company’s market capitalization. The 2012 CEO Performance Award has ten equal vesting tranches that require the Company to meet these conditions. Nine of the tranches have vested as of this writing.
