Tesla is nixing merit-based stock awards for salaried employees this year, according to media reports Wednesday. This follows news the global EV giant is raising wages in 2024 for some set-rate hourly workers at its Nevada plant. TSLA shares dropped Wednesday afternoon.
Tesla is still offering cost-of-living increases and adjustments to base salaries, but has decided against including merit-based stock grants, which have traditionally been handed out, in this year's compensation package, Bloomberg reported Wednesday night.
This comes even as Tesla stock has surged more than 100% in 2023. However, to maintain sales momentum, Tesla has aggressively cut vehicle prices throughout the year, which has dropped auto gross profit margins, excluding regulatory credits, below 20%. Tesla's auto gross profit margins excluding regulatory credits in Q3 fell to 16.3%, after peaking at 30% in Q4 2021.
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In the past, the merit-based stock awards have been touted as a way to incentivize employees remaining at the company, with the equity taking four years to vest.
Tesla stock declined 3.9% to 247.19 Wednesday during market action as Reuters also reported that tens of thousands of Tesla owners have experienced suspension and steering failure, dating back at least seven years.
The EV giant has more detailed knowledge about vehicle defects than it has disclosed to the public or regulators, according to Reuters.
On Tuesday, shares gained 2% to 257.22. In December, the stock has angled 3% higher.
Meanwhile, CNBC reported Tuesday that Tesla will give around 10% wage increases to some set-rate hourly workers at its Nevada Gigafactory beginning in early 2024. Plant employees were informed of cost of living adjustments bumping hourly workers from $20 to $22 an hour on the low end, and from $30.65 up to $34.50 an hour on the high end.
Tesla Stock Performance
TSLA shares sank after the EV giant reported worse-than-expected Q3 earnings and revenue on Oct. 18. However, Tesla stock is building the right side of a double-bottom base giving it a 278.98 buy point, according to MarketSmith analysis.
Tesla stock rose 4% last week, slightly topping the Nov. 29 high of 252.75 as an early entry. Shares advanced 2% to 257.22 on Tuesday, back above that level.
So far in 2023, Tesla has gained 108%, easily outperforming the broader S&P 500 index.
Tesla ranks fourth in the 35 member IBD Automaker industry group. The S&P 500 component has an 81 Composite Rating out of a best-possible 99. Tesla stock also has an 84 Relative Strength Rating and an 88 EPS Rating.
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