COMP NEWS – Tesla has announced that it is canceling any employee bonus that was based on meeting delivery quotas. However, Tesla is increasing salary compensation to make up for the lost employee bonuses.

Tesla has decided to cancel any employee bonuses tied to its quarterly delivery quotas. The automaker is also raising base salaries for sales and delivery employees to compensate for the bonuses going away.

The canceled employee bonus was equal to 25% of salary paid in cash or employee stock options.

Tesla was still offering bonuses to its sales and delivery staff, but it was based on bigger store-based and region-based quarterly delivery quotas. If those quotas were made, employees would get a 25% bonus on their salaries issued in a choice of cash or stock options on a vesting schedule.

However, canceling these quota-based bonuses will result in lower overall compensation for employees. Most employees have been hitting their quotas and receiving an employee bonus of around 25%. Therefore, the rise of 12.5% in place of the bonus is a heavy overall compensation reduction.

In order to compensate for the bonuses going away, Tesla is raising sales and delivery employee base salaries by 12.5%.

The bonus model was quite successful for Tesla with delivery records for seven quarters in a row. Historically, most Tesla employees have been getting their bonuses every quarter for the past two years, and therefore, it will be a reduction in total compensation for them.

Tesla is also planning to move all car sales online instead of in stores. This resulted in Tesla slashing retail employee bonuses and compensation.

Things started to change in 2019 when CEO Elon Musk said that they plan to move all sales online-only, close most stores, and reduce retail headcount.

It resulted in Tesla slashing retail employee compensation and closing a first wave of stores, but the automaker ended up reversing some of those changes and has since not only kept most stores open, but it has now significantly expanded its retail presence.

To read more Tesla’s salary compensation and changes in bonus structure, click here.

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