01—Abstract
Summary
Summary of the 10-K/A filed April 28, 2020. Cited figures are marked; the original filing is the authoritative source.
This Tesla, Inc. (TSLA) 10-K filing, filed on April 27, 2020, primarily details the company's corporate governance, including its Board of Directors and executive officers, and executive compensation for the fiscal year ending December 31, 2019.
The report highlights the extensive experience of its board members, many of whom have backgrounds in technology, finance, and venture capital. A significant portion of the filing is dedicated to explaining the compensation structure for named executive officers, which heavily emphasizes equity-based incentives designed to align their interests with long-term stockholder value, particularly through performance-based stock options tied to ambitious market capitalization and operational milestones. The compensation discussion emphasizes Tesla's philosophy of attracting and retaining talent through performance-driven rewards and its unique approach of not offering annual cash bonuses or severance packages for most executives.
The filing details Elon Musk's compensation, noting that while he historically had a nominal salary, he has not accepted it, and his compensation is heavily weighted towards significant, long-term performance-based stock awards tied to substantial increases in market capitalization and operational achievements, such as revenue and Adjusted EBITDA targets. The report also touches upon related party transactions, primarily with SpaceX, and director independence.
02—Key points
Key Highlights
- Tesla's Board of Directors comprises experienced individuals with diverse backgrounds in technology, finance, and business leadership, including key figures like Elon Musk, Robyn Denholm, and Lawrence J. Ellison.
- Executive compensation is heavily weighted towards equity-based incentives, particularly performance-based stock options, to align executive interests with long-term stockholder value.
- Elon Musk's compensation is primarily tied to a significant performance-based stock option award (2018 CEO Performance Award) with ambitious market capitalization and operational milestones, designed to incentivize long-term growth.
- The company generally does not offer annual cash bonuses or severance packages to its named executive officers, reflecting its startup origins and focus on long-term equity alignment.
- Significant related party transactions exist, primarily with SpaceX, involving sales of components and services, with terms reportedly negotiated in good faith.
- The company's independent auditor is PricewaterhouseCoopers LLP, with fees for audit and non-audit services disclosed.
- As of December 31, 2019, Elon Musk beneficially owned approximately 20.8% of Tesla's outstanding common stock, underscoring his significant stake in the company.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2019, Tesla, Inc. lost $0.04.
- Revenue$24.58B100.0%
- Cost of revenue−$20.51B83.4%
- Gross profit$4.07B16.6%
- Operating costs−$4.14B16.8%
- Operating income−$69.0M0.3%
- Interest, other & tax−$793.0M3.2%
- Net income−$862.0M3.5%
04—Financials
Financial Highlights
Figures from 10-K/AFY2019filed April 28, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $24.58B$21.46B | +14.5% |
| Cost of Revenue | $20.51B$17.42B | +17.7% |
| Gross Profit | $4.07B$4.04B | +0.7% |
| R&D Expenses | $1.34B$1.46B | −8.0% |
| SG&A Expenses | $2.65B$2.83B | −6.7% |
| Operating Expenses | $4.14B$4.43B | −6.6% |
| Operating Income | -$69.00M-$388.00M | +82.2% |
| Interest Expense | $685.00M$663.00M | +3.3% |
| Net Income | -$862.00M-$976.00M | +11.7% |
| EPS (Basic) | $-0.33$-0.38 | +14.0% |
| EPS (Diluted) | $-0.33$-0.38 | +14.0% |
| Shares Outstanding (Basic) | 2.66B2.56B | +4.0% |
| Shares Outstanding (Diluted) | 2.66B2.56B | +4.0% |
05—Questions
Frequently Asked Questions
What is the primary focus of this 10-K filing?
This 10-K filing, specifically an amendment, focuses on Tesla's corporate governance, including details about its Board of Directors, executive officers, and executive compensation for the fiscal year ending December 31, 2019. It provides insights into the structure, qualifications, and compensation strategies for its leadership team.
How is Elon Musk's compensation structured, and what are the key performance metrics tied to his awards?
Elon Musk's compensation is primarily driven by a significant performance-based stock option award (the 2018 CEO Performance Award). This award vests based on achieving ambitious milestones related to market capitalization (starting at $100 billion and increasing by $50 billion increments) and operational targets, such as specific levels of total revenue and Adjusted EBITDA. Notably, he has not accepted a base salary since May 2019.
What is Tesla's general philosophy regarding executive compensation?
Tesla's compensation philosophy is designed to attract, retain, and incentivize highly qualified executive officers who align with the company's mission. It emphasizes long-term stockholder interests through equity-based incentives and performance-based rewards. The company historically has not provided annual cash bonuses or severance provisions for most executives.
Are there any significant related party transactions disclosed?
Yes, the filing details related party transactions, most notably with SpaceX, where Elon Musk is also CEO. These transactions include sales of battery components, vehicle parts, and Tesla Energy systems, with pricing reportedly negotiated in good faith. Tesla also incurs expenses for using an aircraft owned by SpaceX.
06—Continue