01—Abstract
Summary
Summary of the 10-K/A filed May 2, 2022. Cited figures are marked; the original filing is the authoritative source.
This 10-K/A filing from Tesla, Inc. for the period ending December 30, 2021, provides an overview of its Directors and Executive Officers, along with detailed information on executive compensation.
The company's compensation philosophy heavily emphasizes long-term incentives through equity awards, primarily stock options, to align executive and stockholder interests. This approach is designed to motivate achievement of sustainable stockholder value and tangible milestones rather than simply retaining employees. The filing details the compensation structure for named executive officers, including CEO Elon Musk, CFO Zachary Kirkhorn, and SVP Andrew Baglino.
Elon Musk's compensation is largely performance-based, with his significant equity awards tied to ambitious market capitalization and operational milestones. The report also outlines the compensation for non-employee directors, which also heavily features equity-based awards to ensure alignment with shareholders. Corporate governance aspects, including Board committees, director independence, and related party transactions, are also covered.
02—Key points
Key Highlights
- Tesla's compensation philosophy heavily relies on equity-based incentives, primarily stock options, for executives and directors to align long-term interests with stockholders.
- CEO Elon Musk's compensation is significantly tied to performance-based stock option awards (2018 CEO Performance Award) with ambitious market capitalization and operational milestones.
- The 2018 CEO Performance Award includes 12 tranches, each vesting upon achievement of specific market capitalization and operational (revenue/EBITDA) targets.
- As of April 29, 2022, 11 out of 12 tranches of the 2018 CEO Performance Award had vested.
- Non-employee directors' compensation also primarily consists of stock options, designed to be 'at-risk' and dependent on stock price appreciation.
- The company maintains a clawback policy for incentive payments in case of financial restatements.
- Related party transactions, notably with SpaceX (where Elon Musk is also CEO), are disclosed and are stated to be on terms no less favorable than those offered to unaffiliated third parties.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Tesla, Inc. kept $0.10.
- Revenue$53.82B100.0%
- Cost of revenue−$40.22B74.7%
- Gross profit$13.61B25.3%
- Operating costs−$7.08B13.2%
- Operating income$6.52B12.1%
- Interest, other & tax−$1.00B1.9%
- Net income$5.52B10.3%
Where FY2021 revenue went
$53.82B- Cost of revenue: $40.22B, 75% of revenue
- Net income: $5.52B, 10% of revenue
- R&D: $2.59B, 4.8% of revenue
- SG&A: $4.52B, 8.4% of revenue
- Interest, other & tax: $1.00B, 1.9% of revenue
Kept 10% as net incomeNet income $5.52B · 10%Interest, other & tax $1.00B · 1.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2021filed May 2, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $53.82B$31.54B | +70.7% |
| Cost of Revenue | $40.22B$24.91B | +61.5% |
| Gross Profit | $13.61B$6.63B | +105.2% |
| R&D Expenses | $2.59B$1.49B | +73.9% |
| SG&A Expenses | $4.52B$3.15B | +43.6% |
| Operating Expenses | $7.08B$4.64B | +52.8% |
| Operating Income | $6.52B$1.99B | +227.1% |
| Interest Expense | $371.00M$748.00M | −50.4% |
| Net Income | $5.52B$690.00M | +699.9% |
| EPS (Basic) | $1.87$0.25 | +648.0% |
| EPS (Diluted) | $1.63$0.21 | +676.2% |
| Shares Outstanding (Basic) | 2.96B2.80B | +5.8% |
| Shares Outstanding (Diluted) | 3.39B3.25B | +4.2% |
05—Questions
Frequently Asked Questions
What is Tesla's primary strategy for executive compensation?
Tesla's primary strategy for executive compensation is to offer long-term incentives through equity awards, predominantly stock options. This approach aims to align the interests of executives with those of stockholders by tying compensation to the company's long-term stock performance and the achievement of significant operational milestones. Cash compensation, such as base salary, is minimal for key executives like Elon Musk.
How is Elon Musk's compensation structured?
Elon Musk's compensation is heavily weighted towards performance-based equity awards, specifically stock options granted under the 2018 CEO Performance Award. These awards vest based on the achievement of challenging market capitalization and operational performance targets. He has also forgone his base salary since May 2019. The value he ultimately realizes from these awards is contingent on Tesla's stock price performance and the satisfaction of these rigorous performance conditions.
What are the key performance indicators for executive compensation and board awards?
For executive compensation, especially Elon Musk's, key performance indicators include ambitious market capitalization targets (e.g., reaching specific levels of market cap) and operational milestones such as revenue growth and Adjusted EBITDA. For non-employee directors, compensation is primarily in the form of stock options, with their value directly linked to the stock price appreciation.
Are there any provisions to recover executive compensation in case of financial misstatements?
Yes, Tesla has a compensation recovery ('clawback') policy. This policy allows the Board to seek recovery of incentive payments from executive officers if those payments were based on financial results that were subsequently restated, leading to a lower incentive payment under the restated figures. Elon Musk's 2018 CEO Performance Award also includes a specific clawback provision related to financial restatements.
06—Continue