01—Abstract
Summary
Summary of the 10-K/A filed April 30, 2021. Cited figures are marked; the original filing is the authoritative source.
This 10-K filing for Tesla, Inc. (TSLA) as of December 30, 2020, primarily details the company's corporate governance and executive compensation structure.
It provides an overview of the Board of Directors, their qualifications, and committee memberships, emphasizing the independence of most board members. The filing also delves into the compensation philosophy, compensation elements, and specific compensation packages for named executive officers, with a significant focus on Elon Musk's unique performance-based stock option awards, designed to align his incentives with long-term stockholder value creation through ambitious market capitalization and operational milestones. Key aspects for investors include the structure of executive compensation, which heavily relies on equity-based incentives rather than annual cash bonuses or severance.
The document highlights the significant vested and unvested equity awards for executive officers, particularly Elon Musk's 2018 CEO Performance Award, detailing the vesting conditions tied to challenging financial and operational targets. The report also touches upon director compensation, emphasizing that a substantial portion is 'at risk' through stock options, aligning their interests with stockholders. Overall, the filing underscores Tesla's strategy of incentivizing its leadership team through performance-based equity, directly linking their rewards to the company's long-term growth and market valuation.
02—Key points
Key Highlights
- Elon Musk's compensation is heavily weighted towards equity-based performance awards, notably the 2018 CEO Performance Award, with vesting contingent on achieving significant market capitalization and operational milestones.
- The company's compensation philosophy for executive officers emphasizes attracting, retaining, and incentivizing talent through salary and equity, with no current provision for annual cash bonuses or severance packages.
- Tesla's Board of Directors is structured to ensure independence, with most members meeting NASDAQ's independence standards, and several committees composed entirely of independent directors.
- Director compensation is primarily equity-based through stock options, with a significant portion considered 'at risk,' aligning directors' interests with those of long-term stockholders.
- The filing details the equity awards outstanding for named executive officers, including Elon Musk's 2012 and 2018 CEO Performance Awards, highlighting the conditions for vesting and the number of vested and unvested tranches.
- Related party transactions are disclosed, including those with SpaceX, The Boring Company, and entities affiliated with board members, with an emphasis on standard sales processes and negotiated prices.
- Tesla's strong emphasis on aligning executive and director compensation with long-term stockholder value through equity incentives and performance-based awards is a recurring theme throughout the filing.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Tesla, Inc. kept $0.02.
- Revenue$31.54B100.0%
- Cost of revenue−$24.91B79.0%
- Gross profit$6.63B21.0%
- Operating costs−$4.64B14.7%
- Operating income$1.99B6.3%
- Interest, other & tax−$1.30B4.1%
- Net income$690.0M2.2%
Where FY2020 revenue went
$31.54B- Cost of revenue: $24.91B, 79% of revenue
- Net income: $690.0M, 2.2% of revenue
- R&D: $1.49B, 4.7% of revenue
- SG&A: $3.15B, 10.0% of revenue
- Interest, other & tax: $1.30B, 4.1% of revenue
Kept 2.2% as net incomeNet income $690.0M · 2.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2020filed April 30, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $31.54B$24.58B | +28.3% |
| Cost of Revenue | $24.91B$20.51B | +21.4% |
| Gross Profit | $6.63B$4.07B | +62.9% |
| R&D Expenses | $1.49B$1.34B | +11.0% |
| SG&A Expenses | $3.15B$2.65B | +18.9% |
| Operating Expenses | $4.64B$4.14B | +12.0% |
| Operating Income | $1.99B-$69.00M | +2989.9% |
| Interest Expense | $748.00M$685.00M | +9.2% |
| Net Income | $690.00M-$862.00M | +180.0% |
| EPS (Basic) | $0.25$-0.33 | +176.5% |
| EPS (Diluted) | $0.21$-0.33 | +164.3% |
| Shares Outstanding (Basic) | 2.80B2.66B | +5.1% |
| Shares Outstanding (Diluted) | 3.25B2.66B | +22.1% |
05—Questions
Frequently Asked Questions
What is the primary focus of Tesla's executive compensation strategy as outlined in this filing?
Tesla's executive compensation strategy is heavily focused on equity-based incentives, particularly stock options and awards, designed to align the interests of its named executive officers with the long-term success and value creation for its stockholders. The company generally does not offer annual cash bonuses or severance packages to its named executive officers.
What are the key performance conditions for Elon Musk's major equity awards?
Elon Musk's significant equity awards, such as the 2018 CEO Performance Award, have vesting conditions tied to ambitious market capitalization milestones (increasing by $50 billion increments from $100 billion) and operational milestones related to revenue or Adjusted EBITDA. These conditions are designed to be challenging and require his continued leadership as CEO or in a comparable role.
How does Tesla ensure director independence, and what is the nature of director compensation?
Tesla's Board of Directors is structured with a majority of independent directors, as defined by NASDAQ listing standards. The filing details the independence assessments for each non-employee director. Director compensation consists of cash retainers for board and committee service, but a significant portion is also provided in the form of stock options, which are 'at risk' and only have value if the stock price increases, thereby aligning director interests with stockholders.
Are there any notable related-party transactions disclosed in this filing?
Yes, the filing discloses several related-party transactions, primarily involving entities where Tesla's executives or directors have significant affiliations. These include transactions with SpaceX (for energy systems, vehicle components, engineering support, software licenses, and aircraft usage), The Boring Company (for energy systems), and entities affiliated with board member Lawrence J. Ellison (for energy systems). These transactions are stated to have been conducted through standard sales processes and negotiated in good faith at prices consistent with those offered to third parties.
06—Continue