In an interesting Twitter exchange, Tesla CEO came down hard on a journalist. The NBC journalist asked Musk a “What am I missing here?” question in one of her Tweets. Musk in his reply gave a sharp explanation of her query and tweeted saying “That’s what you’re missing”.
Recently, Rob Kozlowski, a financial journalist shared a report on Twitter saying Elon Musk-led Tesla for the third straight year didn’t provide contributions in the 401(k) plan. The 401(k) plan is a retirement saving account in which an employer adds a particular share of their salary in the savings account which is matched by their employers. But according to the report shared by Kozlowski, Tesla hasn’t done the same for the last three years.
One can safely presume that despite Tesla earning billions by being the most valued company in the world, there are still downsides for employees who are working there. According to reports, Tesla delivered 1,80,570 cars to its customer in 2020 and garnered $721 million in profit on its total revenue of $31.5 million.
More about the 401(k) plan and how Musk’s explanation
The 401(k) is a savings schematic under which employee of the respective company is eligible to direct a portion of their salary for their long-term investment. Due to its eligibility of availing special tax benefits under the US Internal Revenue Services (IRS) guidelines, it comes under the category of retirement plan.
However, recently it was discovered that the company for the third straight year did not contribute to the plan. However, according to the company’s Form 5500, the company does enroll its employees with a deferral rate of 5% of their salaries.
— Rob Kozlowski (@Kozlowski_PI) February 8, 2021
The tweet was then quoted by NBC journalist Stephanie Ruhle who tagged the Tesla CEO in her query saying “What am I missing? Tesla has paid @elonmusk billions & they are unwilling to match employee 401Ks? Do I have this wrong?”
— Stephanie Ruhle (@SRuhle) February 8, 2021
The electric vehicle company owner himself responded to the Tweet and gave a simple explanation saying, “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’s reply to the journalist was liked on Twitter by more than 60,000 people and his followers, who also fondly address him by ‘Papa Musk’, reacted in their own ways. Some of these followers appreciated Musk’s compensation plan while others remained critical.
By the end of 2020, the stock value of Tesla had soared as high as 695% and yet, the company is not contributing to its employees in a traditional sense. This proves that Tesla employees on one side don’t receive any 401(k)-retirement plan, but they do end up receiving stocks.
With its significant increase in stock price, the company’s stocks are responsible for making the people who work in the company millionaires. Drew Baglino, who served as Tesla SVP currently holds 4,222 shares in Tesla which makes his stake in the company more than $5.7 million. Similarly, the President of Automotive, Jerome Guillen, holds more than 9500 stocks which makes his stake in the company over $13 million.
However, there is a different side to the argument here as well, employees who are at a lower pay level are benefiting to a much lower degree. According to tech website Electrek, new employees are given somewhere between $20,000-40,000 worth of restricted stocks that are vested over three years.