Elon Musk, Tesla Motors Inc.’s chief executive officer and co-founder, was granted an option to buy 5.27 million shares as part of a long-term compensation plan to keep him at the maker of luxury electric cars .
Musk, already the largest stockholder of Palo Alto, California-based Tesla with a 25.8 percent stake, can exercise the option at a price of $31.17 a share, according to a regulatory filing yesterday. The option, granted Aug. 13, has a 10-year term and vests in 10 equal installments based on the company meeting certain milestones, according to the filing.
The stock option is the first since Dec. 4, 2009, for Musk, Tesla said in an Aug. 2 filing. He currently has an annual base salary of $33,280, according to that filing. Musk, 41, also leads aerospace company Space Exploration Technologies Corp. and is chairman of solar panel installer Solarcity Corp.
“From a financial perspective, these options aren’t going to change the way he looks at things,” said Alan Baum, principal of auto-industry forecaster Baum & Associates in West Bloomfield, Michigan. “He started his companies because these are his interests. He’s obviously very invested in them financially, emotionally and socially.”
Tesla is ramping up production of battery-powered Model S sedans at its Fremont, California, plant with a goal of delivering 5,000 this year and 20,000 in 2013. Musk, who is also chairman of the company named for inventor Nikola Tesla, expects Tesla to report its first profitable quarters next year.
Goals for Musk’s options to vest fully include Tesla’s market capitalization, now $3.2 billion, reaching $43.5 billion; development and production of the Model X sport-utility vehicle and lower-priced “Gen III” electric car; gross margin of 30 percent or more for four consecutive quarters; and aggregate production of 300,000 vehicles, according to the Aug. 2 filing.
The company’s long-term market capitalization target looks “somewhat difficult,” given its size, Baum said.
Tesla rose 3.1 percent to $30.30 at the close in New York. The shares have gained 6.1 percent this year.