Following shareholders' approval of Elon Musk's massive compensation package, Tesla has revealed that it will provide new stock options to its top-performing employees.
These developments have sparked a debate about Tesla's compensation policies and their implications for employee equity and corporate governance.
A stop sign stands near the Tesla logo at the Tesla factory on July 17, 2023 near Gruenheide, Germany. (Photo : Sean Gallup/Getty Images)
Elon Musk recently revealed that Tesla would issue new stock options to its top-performing employees. This move follows the shareholders' approval of the Tesla CEO's record-breaking compensation package.
A Delaware judge had previously rescinded Musk's compensation package, citing misleading information provided to shareholders. Adding to the complexity, Bloomberg reported that Tesla had also terminated stock compensation for its employees only a few weeks before the judge's decision.
Unlike Musk, Tesla employees did not have shareholders advocating for their stock options. Last week, shareholders voted to approve Musk's pay package, valued at $56 billion in shares, amid controversy and legal challenges.
Despite canceling employee stock compensations, Musk's substantial compensation package received strong backing from investors.
Tesla CEO Elon Musk Reinstating Stock Options for Top Performers
Following this decision, Elon Musk announced in a memo that Tesla would resume issuing stock options to employees, focusing on rewarding exceptional performance.
The Tesla CEO noted that the company will conduct a thorough review in the coming weeks to identify employees who have demonstrated outstanding contributions to the firm.
Electrek reported that these high performers will be granted stock options for their efforts. Additionally, Musk revealed that Tesla would implement an ongoing program to award spot option grants to employees who achieve remarkable results.
This move aims to incentivize and retain top talent in the company. Musk commended employees for their contributions to making Tesla successful, emphasizing the importance of employee contributions to the company's continued growth and success.
In addition to canceling stock options for employees late last year, Tesla also halted pay adjustments for many workers. Musk has frequently cited Tesla's stock options, previously available to all employees, as a reason why the company pays its workers better than most other automakers.
This claim held up when Tesla's stock was performing well. However, the situation has changed, with the stock down 26% year-to-date. While shareholders ardently defended Musk's compensation package, the same effort was not seen for Tesla employees who lost their stock options.
It appears Musk felt some remorse about this discrepancy, as he announced plans to reinstate stock options for employees, but only those demonstrating "exceptional performance."
This move, contingent on judicial approval of Tesla's ratification process, shows a partial concession rather than a complete restoration of benefits for all workers. It is a step in the right direction, even though it's a small one.
