![]() ![]() Significantly, four of the 10 comparator companies did not make equity grants to their Founder CEOs during their last five fiscal years (Alphabet, Amazon, Facebook and Garmin). The value of the Musk Option is approximately 80 times the median just noted. The median of the total values of equity awards over the last five fiscal years provided by the 10 comparator companies to their Founder CEOs was approximately $32.6 million (based on grant-date values as reported in proxy statements). The value of the Musk Option, $2.6 billion, was estimated by Tesla, as noted in the May 1 column, using a so-called Monte Carlo option-pricing model (an alternative to Black Scholes). (a) Musk Option Compared to Equity Awards to Other Founder CEOs. The rationale for using five years of pay data is that on January 21, 2018, when the Musk Option was granted, approximately five years had elapsed since Tesla granted a significant stock option to Mr. Musk’s pay at Tesla with the pay of the Founder CEOs at the 10 comparator companies, we looked at the Founder CEOs’ pay for the last five fiscal years of their respective companies. (Outstanding stock options and other forms of equity awards were not included in calculating this percentage.) The median value of Founder CEO stock ownership among the comparator companies as of June 15, 2018, was approximately $5.2 billion. The median of the percentages of outstanding shares owned by Founder CEOs of the 10 comparator companies was approximately 5.2 percent, based on their most recent proxy statements. Musk’s shares had a value on June 15, 2018, of approximately $12 billion. Based on Tesla’s market cap of approximately $61 billion, as just noted, Mr. Musk owns approximately 20 percent of the outstanding shares of Tesla (outstanding stock options were not included in calculating this percentage). Tesla’s market cap as of June 15, 2018, was approximately $61 billion. The median market cap for the 10 companies as of June 15, 2018, was approximately $166 billion. The 10 high-tech companies examined are Amazon, Alphabet (Google’s parent), Facebook, Oracle, Nvidia, Netflix, Salesforce, Akamai Technologies, Garmin and Monolithic Power Systems. Musk’s Stock Ownership and Pay Compared to Other Founder CEOs Musk and Tesla as nominal defendant. Tornetta v. Finally, it discusses briefly the stockholder class action derivative complaint regarding the Musk Option filed under seal on June 5 (a redacted version was made public on June 7) in the Delaware Chancery Court against Tesla directors including Mr. ![]() The column also comments on legal aspects of the award under Delaware law. “Founder CEOs” are CEOs (or, in two cases, Executive Chairmen who had previously served as CEO) who founded or co-founded the enterprise. Musk’s ownership and certain of his arrangements at Tesla with those of “Founder CEOs” at 10 other high-tech companies. Musk is one of the founders of Tesla, as described in Tesla’s proxy statements. (Tesla) to its Chairman and CEO, Elon Musk, representing 12 percent of Tesla shares outstanding on the option grant date (the “Musk Option”). On May 1 this column reported on the $2.6 billion stock option granted earlier this year by Tesla, Inc. ![]()
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