### Tesla's Compensation Strategy: Lower Base Salaries, High Reward Stock Grants

Tesla has developed a distinctive compensation approach that differentiates it from its tech and automotive peers. According to an internal salary database acquired by Business Insider, Tesla offers lower base salaries but compensates with substantial stock grants, a strategy that has shaped the company's workforce and hiring processes.

The data, which includes nearly 100,000 employees as of December 2021, reveals that Tesla's median base pay for its roughly 13,000 full-time, salaried, US-based employees ranges from $35,000 to $324,000 depending on job titles. Despite the lower base salaries, this high-risk, high-reward system is designed to attract employees who are highly committed to Tesla's mission.

Nine current and former Tesla employees indicated that the pay structure has remained relatively consistent and aligns with CEO Elon Musk's vision to hire the most dedicated workers. A former Tesla recruiter noted that the length and complexity of Tesla’s hiring process, particularly for engineering roles, further ensures that only the most passionate candidates are brought on board.

A comparative analysis using Securities and Exchange Commission data shows Tesla's median base pay is less than that of traditional automakers and major tech firms, with the exception of Amazon. This aligns with observations from current and former employees who confirm that Tesla's base salaries are generally lower than those of competitors. However, stock grants help bridge this gap.

In 2020 and 2021, 44 US-based Tesla employees were awarded stock worth more than $1 million. Analysis of the data revealed that engineering staff frequently received stock grants exceeding $25,000, and Tesla's executive team received offerings ranging from $950,000 to $20 million. Employee stock grants mostly comprised restricted stock units (RSUs), with a smaller portion being nonqualified stock options and incentive stock options.

Despite significant volatility in Tesla's stock, its long-term growth has made stock grants an enticing component of the compensation deal. Over the past five years, Tesla's stock soared over 1,000%, making these grants potentially very lucrative. Consequently, many Tesla workers accept lower salaries in exchange for stock with the hope of substantial future payouts.

According to Harley Shaiken, an expert in the auto industry, Tesla’s pay strategy has more in common with Silicon Valley companies like Google and Meta, rather than traditional automakers like General Motors and Ford. This tech-centric approach has helped Tesla attract talent looking for significant financial opportunities through equity.

However, this strategy is not without its concerns. Some employees like Zaheer Mohiuddin and Greg Selker suggest that while the stock grants are appealing, they are dependent on Tesla's stock performance continuing to thrive. A longtime Tesla staffer expressed concern that new hires may not experience the same benefits as those who joined the company in its earlier stages, given the stock market's unpredictable nature.

Tesla's ongoing approach to compensation, combining lower base pay with significant stock grants, underscores the company's unique position at the intersection of automotive manufacturing and cutting-edge technology.