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Tesla pays employees less than competitors, but offers stock grants and seeks 'fanatics' - Business Insider

Tesla pays employees less than competitors, but offers stock grants and seeks 'fanatics' - Business Insider
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The publication Business Insider has gained access to an internal Tesla salary database containing information on approximately 100,000 employees.

Although the data is somewhat outdated (from December 2021), it allows for comparisons with the salary levels of competitors during the same period. Notably, Tesla offers its employees a lower base salary compared to other companies in the automotive sector, but compensates with stock grants for the future.

Distribution of base salary for Tesla employees in the U.S. (non-executives) as of December 2021:

How much do competitors pay?

Based on data from the Securities and Exchange Commission, BI compared Tesla's average base salary with that of other automakers and the six largest tech companies by market capitalization.

In fact, Elon Musk's company lags behind all but Amazon—although a range of factors could affect average salary, the data aligns with what four current and former Tesla employees report: the base salaries at the company are generally lower than those of competitors.

The Path to a Million

Overall, both current and former Tesla employees indicate that stock grants make it easier to accept lower base salaries. In November, following Trump's re-election as president, the automaker’s stock rose by approximately 8%, increasing the company’s market capitalization to $1 trillion. Meanwhile, over the past five years, Tesla's stock has risen more than 1000%.

According to BI, in 2020 and 2021, 44 employees at Tesla in the U.S. were offered stock grants valued at over $1 million.

“We provide stock options to everyone. We’ve made many people, who didn’t even know what stocks were, millionaires,” said Elon Musk last year.

Tesla is not the first company to enhance base salaries with stock grants—similar systems are used at Meta, Google, and Amazon. However, a survey by Levels.fyi showed that the average base pay along with stock grants for American software engineers at Tesla is slightly lower than that at the aforementioned companies.

Tesla stock grants by job category

BI also provided more specific data regarding stock grants for top executives: Drew Baglino, the former senior vice president at Tesla, and Zachary Kirkhorn, the former CFO, received stock worth $20 million each; meanwhile, Musk's right-hand man, Omead Afshar, received stock worth $10 million.

“This is part of the perks of taking risks by working for a company like Tesla,” said one of the engineers at the firm. “You might have to deal with startup issues—long hours, some uncertainty—but it can also yield significant rewards.”

Hiring Strategy

In an interview, one employee stated that the main criterion for hiring specialists for Elon Musk remains unchanged—a fanatical passion for work and a willingness to give everything up for it (recall how he encourages employees to sleep in the offices).

“The whole system is tuned to find fanatics,” said a Tesla worker. “People could earn higher salaries elsewhere, but they are obsessed with Tesla.”

Meanwhile, a former recruiter who worked at the company until 2024 mentioned that the interview process includes at least nine interviews and can last for months—another way to filter genuine enthusiasts into the company.

“It’s not even about how smart or experienced someone is. They’re looking for someone who wants to learn and can put in extra hours.”

According to regulatory documents, as of December 2023, Tesla employed over 140,000 people worldwide. In April, the company announced a 10% reduction in its workforce, leading to an estimated 120,000 employees remaining by June.

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