Tesla (TSLA) 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 edged higher.
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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 marginsexcluding 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 advanced 0.5% to 258.50 Wednesday during market action. On Tuesday, shares gained 2% to 257.22. In December, the stock has angled 7% higher.
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 pointaccording 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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