Elon Musk Defends Tesla Not Matching 401(k)
Elon Musk is defending his company as Tesla draws criticism for not matching employee 401(k) contributions.
Elon Musk’s defense is that all employees are compensated in stock and options, which has been far more profitable than a cash 401(k) match for the last several years.
Musk also emphasizes that he doesn’t take his options off the table, so he is just as invested in the company as the employees.
The key question now is: should employees be paid in Tesla stock? For many employees, it’s worked out really well. But what if Tesla stock doesn’t do as well one year?
Stock-based compensation is great for some employees, but what about ones with a very low risk profile? The company doing poorly could give workers double the risk: not only would their jobs be in danger, but their stock options would decline in value compared to a 401(k) diversified into other securities.
Do you think it’s right for Tesla to skip 401(k) matching? Let us know in the comments below.
Several investors and Tesla fans came to Musk’s defense. The primary argument supporting Tesla here is that employees have so far been way better off with stock options compared to a cash 401(k) match.
The main critique against Tesla’s policy is that it may be too risky for everyday employees. Should a factory worker’s entire salary and retirement be dependent on one company?