Tesla plans to produce 495,000 Model Y and Model 3 globally in the fourth quarter, much higher than the third quarter; Build 1.6 million Model Y and Model 3 in-house. Tesla plans to produce 495,000 Model Y, and Model 3 vehicles globally in the fourth quarter
Tesla Model Y and Model 3
Tesla will start to provide cash incentives to employees instead of traditional equity awards.
The documents show that employees can still receive stock awards if they so choose. But by default, they will be rewarded with cash.
Shares of Tesla have risen sharply over the past few years. At the start of 2020, it was near $30 after split-adjusted, and it closed at $268.21 on Thursday.
These awards are awarded to employees when they are hired, adjusted, or promoted, and as part of their annual performance review. Employees in New York, Ohio, and Louisiana are excluded from the change due to local laws.
Tesla’s adjustment to the form of compensation comes at a time when the U.S. stock market is in a downturn. To this end, other tech companies have adjusted accordingly, but not in the same way as Tesla. Other companies tend to provide employees with additional cash or stock, shorten grant times, or control the ratio of cash, restricted stock units (PSUs), and options.
In one of the documents, titled “New Rewards Program,” Tesla said the change was made to allow employees “maximum flexibility in compensation.”
Tesla has not commented on this.
Industry insiders say Tesla’s replacement of equity with cash as the default reward for employees is an unusual move because equity grants are often seen as a key lever for attracting and retaining talent. By offering cash as the default reward, Tesla is breaking with this long-standing tradition in the tech industry.
Bonus in four-year tranches
The documents also show that cash awards are issued in a way similar to equity. Employees who accept the default cash bonus will receive the bonus in four-year tranches, with a quarter of the bonus paid each year, rather than the full bonus at the start of their tenure. The first tranche is paid at the end of the employee’s first year of employment. For the next three years, employees will receive a portion of the reward every three months.
The filing also shows that Tesla rolled out the program for most new hires on September 22. One of the documents said the plan will take effect globally on Nov. 2.
Tesla’s decision to use cash as the default reward
One possible explanation for Tesla’s decision to use cash as the default reward is to prevent stock dilution, industry sources said. Last year, Tesla’s workforce grew by 40%, from 70,757 at the end of 2020 to 99,290 at the end of 2021. According to a report on Tesla’s website, each employee has the option to receive restricted stock units (RSUs) or stock options.
While Tesla CEO Elon Musk announced in June a plan to cut 10% of its workforce, he also said that Tesla will continue to increase the number of factory workers and increase its workforce over the next year. total.
Big impact on Stock Tesla grants to employees
Making cash the default choice for employees could have a big impact on the amount of stock Tesla grants to employees. Industry insider James Red expects that, in a situation similar to Tesla’s (default bonus cash), about 30% to 40% of employees would stick with the default option and not consider other options.
Rida said the practice could help prevent tensions between Tesla and its shareholders, especially the next time Tesla asks shareholders for approval to allocate new stock for employee incentives (about every two to four years for public companies). will go through this process once).
Also, from an employee’s perspective, having cash as the default reward also means that it will be easier for them to leave Tesla in the future because there is no need to worry about the potential upside of outstanding equity.
Employee benefits and compensation consulting
Tauseef Rahman, a partner at employee benefits and compensation consulting firm Mercer, said that while there are other companies that allow employees to choose cash, restricted stock or options, none have gone public (except Tesla). Make cash the default option for rewarding employees.
Shares of Tesla have significantly outperformed many other big tech companies over the past year. Shares of Tesla had risen 3% in the past year through Thursday, while shares of Facebook parent Meta had fallen about 60% and Amazon’s had fallen about 30%.