Tesla chief executive Elon Musk has revealed why the electric car maker does not make any matching contributions to its 401(k) plan. In the United States, a 401(k) is a popular company-sponsored retirement account that employees can contribute a percentage of their salary to. Employers can make matching contributions – something which Tesla has chosen not to do for three years running, reveals a report from Pensions & Investments.
Journalist Stephanie Ruhle quoted the report while tagging Elon Musk and asking why Tesla appears to be unwilling to match employee 401(k) contributions while paying billions to Mr Musk – who recently dethroned Amazon’s Jeff Bezos to become the world’s richest person.
“What am I missing?” asked Ms Ruhle on Twitter. “Tesla has paid @elonmusk billions & they are unwilling to match employee 401Ks?”
Elon Musk, 49, responded to Ms Ruhle’s query and revealed that all Tesla employees receive stock options.
“Everyone at Tesla receives stock. My comp is all stock/options, which I do not take off the table. That’s what you’re missing,” he wrote.
Everyone at Tesla receives stock.
My comp is all stock/options, which I do not take off the table.
That’s what you’re missing.
— Elon Musk (@elonmusk) February 9, 2021
The billionaire’s response to the query was ‘liked’ over 60,000 times on the microblogging platform where he has more than 46 million followers. Reactions were mixed – with some Twitter users praising the compensation plan and others criticising it.
Ms Ruhle herself remarked on the “beauty of Twitter”, saying that the platform allowed people to get direct answers from businessmen who would otherwise be unavailable for comment.
“That is a win for all employees & a great way to keep everyone incentivized to be there & optimize productivity,” she wrote before asking further questions on how the compensation plan is structured.
The beauty of twitter-getting the answer direct.
That is a win for all employees & a great way to keep everyone incentivized to be there & optimize productivity.
How is it structured?
If it’s “share based comp”, does that count as an expense then added to adjusted earnings?
— Stephanie Ruhle (@SRuhle) February 9, 2021
According to news website Electrek, Tesla offers stock options and grants as part of its compensation package to all employees. Unlike most other automakers, the company provides stock options to all its employees, and not just those in management.
Because of this compensation plan, Tesla’s meteoric rise has helped make many of its employees very rich, with many of its top executives owning stocks worth millions.
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