Cars and Drivers

Are Tesla Stock Options Enough to Beat Back Union Organizers?

Wikimedia Commons (Jeff Cooper)

Efforts to unionize production line workers at Tesla Inc. (NASDAQ: TSLA) made the news earlier this month following a Tesla worker’s blog post outlining pay and working conditions at the company. CEO Elon Musk wasted no time firing back, saying the employee who wrote the post, Jose Moran, was paid by the union.

All pretty typical so far. But in Wednesday’s conference call Musk raised the stakes. Moran had written that Tesla’s production workers were paid between $17 and $21 an hour, well short of the average U.S. autoworker earning more than $25 an hour. Musk contested the claim, saying that once stock options are calculated, Tesla’s employees are “the highest paid in the industry.”

Musk also promised to publish the results of his own review of working conditions at Tesla in “the next day or two.” Whether that publication will include comments on pay and stock option grants is unknown.

Many publicly traded firms offer all employees the opportunity to purchase stock in the company at a reduced price. The purchases are capped at a given percentage of monthly pay. Tesla had an employee stock purchase program in 2015, according to the company’s Form 10-K annual report.

Stock-based compensation expenses totaled $198 million in 2015, rising to $334.2 million last year. The weighted-average, grant-date fair value for options awards granted during 2015 was $108.28. The weighted-average, grant date fair value for employee stock purchase plan grants for the year was $58.77. The fair value of restricted stock units (RSUs) is measured on the grant date based on the closing fair market value of the common stock for that date.

At the end of December 2015, Tesla reported a total of 13,058 full-time employees. In Moran’s blog post he said only that there were 5,000+ production line workers. Tesla probably added a few thousand more employees in 2016 as production began at the company’s Gigafactory in Reno, but it’s unlikely we’ll get more details on how many production workers there are and what the average options/RSU grant is among those workers only.

Comments at employment website are few and mixed on Tesla’s options awards. Here are four:

Very uninspiring RSU grants. Grants between 5-15k are about average and are not even worth a pay check after a 4 year vesting schedule.

This plan is OK. But it has faults! You max out at 15% of your pay each pay period. You do not “always” get this. System “issues” and other excuses to rip you off from trying to get ahead.

Tesla stock options have made people very happy and their teeth even whiter than ever. There is no substitute for what Tesla’s stock options can do.

Stock options in the beginning were more generous. Once you vest there is not much in the way of getting more even if you do a good job. I hear they save the stock for engineers.

The first two comments were posted by persons identified only as a former or current “employee” in Fremont, California. The third was posted by a “current technician” at Tesla’s Fremont plant, and the fourth was posted by a “current worker” in Fremont.

Based on these few comments, the stock options that Musk touts don’t appear to be creating a similar rosy glow among workers. What does the UAW have to offer as an alternative?

Maybe Musk will give some details on the stock option plan for production workers when he publishes his review. We’re not holding our breath.

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