Tesla (TSLA) 10-K/A risk factor changes: FY2021 vs FY2020

For the fiscal year ended December 31, [removed: 2020][added: 2021]

The aggregate market value of voting stock held by non-affiliates of the registrant, as of June 30, [removed: 2020,] [added: 2021,] the last day of the registrant’s most recently completed second fiscal quarter, was [removed: $160.57] [added: $541.28] billion (based on the closing price for shares of the registrant’s Common Stock as reported by the NASDAQ Global Select Market on June 30, [removed: 2020).][added: 2021).]

As of [removed: February 1, 2021,] [added: January 31, 2022,] there were [removed: 959,853,504] [added: 1,033,507,611] shares of the registrant’s Common Stock outstanding.

On February [removed: 8, 2021,] [added: 7, 2022,] Tesla, Inc. (“Tesla,” the “Company,” “we,” “us,” or “our”) filed our Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2020] [added: 2021] (the “Original Form 10-K”).

We currently expect that our definitive proxy statement for the [removed: 2021] [added: 2022] annual meeting of stockholders will be filed later than the 120th day after the end of the last fiscal year.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2020][added: 2021]

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#Item_12) | | [removed: 24] [added: 22] |

| Item 13. | | [Certain Relationships and Related Transactions and Director Independence](#Item_13) | | [removed: 26] [added: 24] |

| Item 14. | | [Principal Accountant Fees and Services](#Item_14) | | [removed: 29] [added: 26] |

| Item 15. | | [Exhibits and Financial Statement Schedules](#ITEM_15_EXHIBITS_FINANCIAL_STATEMENT_SCH) | | [removed: 31] [added: 29] |

| [Signatures](#SIGNATURES) | | | | [removed: 65] [added: 53] |

The names of the members of Tesla’s Board of Directors (the “Board”), their respective ages, their positions with Tesla and other biographical information as of April [removed: 29, 2021] [added: 28, 2022] are set forth below.

| Elon Musk | | [removed: 49] [added: 50] | | | | | | | | | | |

| Robyn Denholm | | [removed: 57] [added: 58] | | X | | X | | X | | X | | X |

| Ira Ehrenpreis | | [removed: 52] [added: 53] | | | | | | X | | X | | |

| Lawrence J. Ellison | | [removed: 76] [added: 77] | | | | | | | | | | |

| Antonio [removed: Gracias(1)] [added: Gracias(4)] | | [removed: 50] | [added: —] | | | [removed: X] | [added: —] | | | | [added: —] | | [added: | | | | — | |]

| Hiromichi Mizuno | | [removed: 55] [added: 56] | | | | X | | | | | | |

| James Murdoch | | [removed: 48] [added: 49] | | | | X | | | | X | | X |

| Kimbal Musk | | [removed: 48] [added: 49] | | | | | | | | | | |

| Kathleen Wilson-Thompson | | [removed: 53] [added: 54] | | | | | | X | | X | | X |

Ms. Denholm also served at Toyota Motor Corporation Australia for seven years and at [added: Arthur Andersen & Company for five years in various finance assignments.]

Ms. Denholm is a Fellow of the Institute of Chartered Accountants of Australia/New Zealand, a member of the Australian Institute of Company Directors, and holds a Bachelor’s degree [removed: in Economics from the University of Sydney, and a Master’s degree in Commerce and a Doctor of Business Administration (honoris causa) from the University of New South Wales.]

[added: From January 2015] to March 2020, Mr. Mizuno was Executive Managing Director and Chief Investment Officer of Japan’s Government Pension Investment Fund, the largest pension fund in the world.

Mr. Mizuno is also involved in [removed: academia,] [added: academia and thought leadership,] having been named to leadership or advisory roles at Harvard University, [removed: Oxford University,] University of Cambridge, Northwestern University and [removed: Osaka University.][added: the Milken Institute.]

[removed: Previously, Mr. Murdoch held a number of leadership roles at Twenty-First Century Fox, Inc., a media company (“21CF”), over two] decades, including its Chief Executive Officer from 2015 to March 2019, its Co-Chief Operating Officer from 2014 to 2015, its Deputy Chief Operating Officer and Chairman and Chief Executive Officer, International from 2011 to 2014 and its Chairman and Chief Executive, Europe and Asia from 2007 to 2011.

Mr. Murdoch [added: also] formerly served on the boards of News Corporation from 2013 to 2020, of 21CF from 2007 to 2019 and of Sky plc from 2003 to 2018.

Mr. Musk [removed: is] [added: was] a director of [removed: SpaceX,] [added: SpaceX from 2002 until January 2022,] and [removed: was] a director of Chipotle Mexican Grill, Inc. from 2013 to 2019.

[removed: Ms. Wilson-Thompson will also serve on the board of directors of Wolverine World Wide, Inc. beginning May 2021 and] [added: She] previously served on the board of directors of Ashland Global Holdings Inc. from 2017 to 2020 and on the board of directors of Vulcan Materials Company from 2009 to 2018.

[removed: Additional Board Information][added: Additional Board Information]

The Audit Committee, which has been established in accordance with Section 3(a)(58) of the Exchange Act, currently consists of Robyn Denholm, [removed: Antonio Gracias,] Hiromichi Mizuno and James Murdoch, each of whom is “independent” as such term is defined for audit committee members by the listing standards of The NASDAQ Stock Market LLC [removed: (“NASDAQ”).]

The names of Tesla’s executive officers, their ages, their positions with Tesla and other biographical information as of April [removed: 29, 2021,] [added: 28, 2022,] are set forth below.

| Elon Musk | | [removed: 49] [added: 50] | | Technoking of Tesla and Chief Executive Officer |

| Zachary Kirkhorn | | [removed: 36] [added: 37] | | Master of Coin and Chief Financial Officer |

| Jerome Guillen | | [removed: 48 | |] [added: Former] President, Tesla Heavy Trucking |

| Andrew Baglino | | [removed: 40] [added: 41] | | Senior Vice President, Powertrain and Energy Engineering |

[removed: Andrew Baglino] [added: Andrew Baglino] has served as our Senior Vice President, Powertrain and Energy Engineering since October 2019.

Based solely upon a review of forms filed with the SEC and the written representations of such persons, Tesla is aware of no late Section 16(a) filings other than one late Form 4 report filed by [removed: Kathleen Wilson-Thompson (reporting the exercise of a stock option and the same-day] [added: Jerome Guillen, who departed Tesla in 2021, reporting] sales [removed: of the resulting shares late] [added: pursuant to a 10b5-1 trading plan,] due to an administrative delay by [removed: Tesla) and one late Form 4 report filed by Antonio Gracias in lieu of the obligation to file two Form 4 reports (each reporting open-market purchases of shares by a third-party discretionary investment authority without Mr. Gracias’ knowledge or direction).][added: Tesla.]

Code of Business [removed: Conduct and] Ethics and Corporate Governance Guidelines

Accordingly, Tesla has adopted a Code of Business [removed: Conduct and] Ethics, which [added: it recently updated in December 2021, which] is applicable to Tesla and its subsidiaries’ directors, officers and personnel.

| 1 Tesla Road Austin, Texas | | 78725 |

(512) 516-8177

| Auditor Name: PricewaterhouseCoopers LLP | Auditor Location: San Jose, California | Auditor Firm ID: 238 |

in Economics from the University of Sydney, and a Master’s degree in Commerce and a Doctor of Business Administration (honoris causa) from the University of New South Wales.

Mr. Mizuno has also served as the representative partner and Chief Executive Officer of Good Steward Partners, LLC, a consulting firm, since March 2021.

Previously, Mr. Murdoch held a number of leadership roles at Twenty-First Century Fox, Inc., a media company (“21CF”), over two

Ms. Wilson-Thompson has served on the board of directors of Wolverine World Wide, Inc. since May 2021 and McKesson Corporation since January 2022.

(“NASDAQ”).

Mr. Guillen departed Tesla in June 2021.

Whereas salary or wages are intended to meet our employees’ near-term liquidity needs, we believe that equity awards are an effective tool for retaining employees long-term, as they vest incrementally over a period of time or upon the achievement of specified performance milestones intended to be achieved over the medium- and long-term.

Moreover, the closing prices of our common stock on the first trading day of each of 2020, 2021 and 2022 were $86.05, $729.77 and $1,199.78, respectively (as adjusted for the five-for-one stock split effected in the form of a stock dividend in August 2020, or the “Stock Split”).

During periods in which our stock price and the underlying value of equity awards increase, their retention impact is even greater.

We believe that the potential for such increases also creates an ownership culture that promotes holding equity, which in turn aligns the interests of our employees with the long-term interests of our stockholders.

For these reasons, our goal is to provide each employee with the opportunity to participate in our equity programs, with certain limited cash-based bonus programs serving generally to accommodate specific incentive structures or liquidity needs.

Combining salary or wages and our equity award program, we strive to offer a total level of compensation that is competitive within specific roles and geographical markets.

In particular, we believe that compensation for the individuals who are responsible for Tesla’s strategic direction and operations should motivate them to achieve sustainable stockholder value and/or tangible milestones rather than to simply remain at Tesla or maintain the status quo.

Therefore, while we offer to our general employee population restricted stock units that will retain some value even if the market value of our stock decreases, we are increasingly emphasizing for our executive officers the grant of stock option awards, which have zero initial value and accumulate value, if at all, only to the extent that our stock price increases following their grant, through the applicable vesting dates and until such stock options are ultimately exercised and the underlying shares are sold.

In addition, because equity awards comprise a greater proportion of our executive officers’ total level of compensation compared to comparable roles at peer companies, a sustained decrease in our stock price or failure to achieve the applicable operational milestones may result in a level of total compensation that is significantly less than that of such peer roles.

Likewise, our outside director compensation program has been comprised primarily of equity

awards that are entirely in the form of stock option awards, as well as relatively modest cash retainer payments that may be waived at the election of each director.

We evaluate our compensation philosophy and programs regularly and evolve them as circumstances merit with oversight by the Compensation Committee, particularly with respect to executive and director compensation.

For example, if our stock price experiences significant movement over a short period of time that results in a persistent change to equity compensation, certain adjustments may be considered to align our compensation programs to their intended purposes.

For example, Compensia, Inc., a national compensation consulting firm (“Compensia”), was retained as compensation consultant in 2020 and 2021 to advise the Compensation Committee with respect to Tesla’s compensation program for its non-employee directors.

Compensia advised the Compensation Committee on the design of the Board’s equity award program for the future period until the Compensation Committee’s and Board’s next review of the program, including a consideration of Tesla’s exceptional performance and commitment to at-risk director compensation in the form of annual stock option awards to ensure continued alignment of the interests of directors with those of Tesla’s stockholders.

See “*Executive Compensation—Compensation of Directors—Non-Employee Director Compensation Arrangements*” below for more detail regarding the review of Board compensation during 2020 and 2021.

| | • | Annual vehicle delivery and production records of 936,222 and 930,422 total vehicles, representing an increase of 87.38% and 82.53%, respectively, compared to the prior year; |

| (3) | Mr. Guillen departed Tesla in June 2021. |

We are increasingly emphasizing for our named executive officers the grant of stock option awards, which have value only to the extent, if any, that our stock price increases following their grant.

Accordingly, all equity awards granted to our executive officers in 2020 (the last year awards were granted to our executive officers) were in the form of stock option awards.

As a result, a significant portion of our named executive officers’ total compensation is entirely at risk, depending on long-term stock price performance

See “*Compensation Discussion and Analysis—Chief*

| | • | adoption and surrogacy benefits; |

| | • | a Section 401(k) plan where, beginning in 2022, Tesla will provide a company match equal to 50% of the employee’s contribution, up to a maximum of 3% of the employee’s eligible compensation with a $3,000 annual cap; |

| 2021 | | — | | | 23,452,910,177 | (3) | | 40,723 | | 734,762,107 | | 18,043:1 |

| (3) | Reflects the exercise of vested stock options scheduled to expire in 2022 as to which Mr. Musk paid the exercise price in cash. Of the shares received upon exercise, 42.0% were immediately sold in order to pay federal and state tax withholding from the option exercise. None of the proceeds from such sales were retained by Mr. Musk. Of the remaining shares, 94.6% were retained by Mr. Musk. The other 5.4% automatically were sold as a result of a Rule 10b5-1 trading plan put in place in September 2021. |

| | 2019 | | 23,760 | (3) | — | | — | | — | | — | | — | | 23,760 | |

| Zachary Kirkhorn | | 2021 | | 301,154 | | — | | — | | — | | — | — | — | | 301,154 |

| Andrew Baglino | | 2021 | | 301,154 | | — | | — | | — | | — | — | — | | 301,154 |

| Jerome Guillen(6) | | 2021 | | 161,538 | | — | | — | | — | | — | | — | | 161,538 |

| (6) | Mr. Guillen departed Tesla in June 2021. |

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| 3500 Deer Creek Road Palo Alto, California | | 94304 |

(650) 681-5000

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| (1) | Mr. Gracias will not stand for re-election when his current term expires at the 2021 annual meeting of stockholders. |

Arthur Andersen & Company for five years in various finance assignments.

Antonio Gracias has been a member of the Board since May 2007 and served as our Lead Independent Director from September 2010 to April 2019.

Since 2003, Mr. Gracias has been Chief Executive Officer of Valor Management LLC, a private equity firm.

Mr. Gracias is a director of SpaceX, and was a director of SolarCity until its acquisition by us in November 2016.

Mr. Gracias holds a joint B.S. and M.S. degree in international finance and economics from the Georgetown University School of Foreign Service and a J.D. from the University of Chicago Law School.

We believe that Mr. Gracias possesses specific attributes that qualify him to serve as a member of the Board, including his management experience with a nationally recognized private equity firm and his operations management and supply chain optimization expertise.

Mr. Gracias will not stand for re-election when his current term expires at Tesla’s 2021 annual meeting of stockholders.

From January 2015

Jerome Guillen has served as our President of Tesla Heavy Trucking since March 2021 and previously served as our President, Automotive from September 2018 to March 2021, our Vice President, Trucks and Other Programs from January 2016 to September 2018, our Vice President, Worldwide Sales & Service from April 2013 to August 2015 and our Model S Program Director from November 2010 to April 2013.

Prior to joining us, Mr. Guillen served as Director, Business Innovation at Daimler AG, an automobile manufacturer, from September 2007 to November 2010.

Mr. Guillen also served as Director, New Product Development at Freightliner LLC, a manufacturer of trucks and heavy duty vehicles, from September 2002 to September 2007.

Mr. Guillen holds a PhD in mechanical engineering from the University of Michigan, in addition to a dual degree in energy technologies from Escuela Tecnica Superior de Ingenieros Industriales in Madrid and in mechanical engineering from Ecole Nationale Superieure de Techniques Avancees in Paris.

| Jerome Guillen | | President, Tesla Heavy Trucking |

We design, develop, manufacture and sell high-performance, fully electric vehicles and energy generation and storage systems, and also install and maintain such energy systems and sell solar electricity.

To achieve our goals, we have designed, and intend to modify as necessary, our compensation and benefits program and philosophy, to attract, retain and incentivize talented, deeply qualified and committed executive officers who share our philosophy and desire to work toward these goals.

We believe compensation incentives for executive officers should promote the success of our company and motivate them to pursue corporate objectives.

We have put an emphasis on structuring compensation incentives so as to reward clear, easily measured performance goals that closely align their incentives with the long-term interests of our stockholders.

Further, we have sought to harmonize the compensation structures of our other employees to conform to our overall compensation philosophy.

Consistent with our historical compensation philosophy, we do not currently provide an annual cash bonus program or any severance provisions for continued cash payments or other benefits upon termination of employment with us.

As our needs evolve, we intend to continue to evaluate our philosophy and compensation programs as circumstances require, and, at a minimum, the Compensation Committee will review executive compensation annually.

We may from time to time make new equity awards and adjustments to the components of our executive compensation program in connection with our periodic compensation review.

In addition, the Board has established a management committee under the Tesla, Inc. 2019 Equity

| | • | Year-end cash and cash equivalents balance of $19.38 billion, representing an increase of $13.12 billion from the end of the prior year; |

| | • | Annual vehicle delivery and production records of 499,647 and 509,737 total vehicles; |

In April 2020, the base salaries of our named executive officers were reduced by 30%.

This reduction was part of a company-wide reduction (subject to applicable laws) for salaried employees, which was intended to be a proactive and temporary response to global market conditions.

The rate of reduction in base salary for our vice president-level and higher employees, including our named executive officers, was higher than those applicable to all other salaried employees.

Subject to applicable laws, such reductions were eliminated after approximately 11 weeks.

We believe that equity awards more closely align the interests of our named executive officers with our stockholders, provide our named executive officers with incentives linked to long-term performance and create an ownership culture.

In addition, the vesting features of our equity awards contribute to executive retention because these features provide an incentive to our named executive officers to remain in our employ during the scheduled vesting periods or until the achievement of the applicable performance milestones, which are expected to be achieved over the medium- to long-term.

positions.

| | • | a Section 401(k) plan for which no match by Tesla is provided; |

| 2018 | | 2,284,044,884 | (5) | | — | | | 56,163 | | 56,380 | | 1.00:1 |

| (5) | Includes $2,283,988,504 attributed to the 2018 CEO Performance Award, which is intended to compensate Mr. Musk over its 10-year maximum term and will become vested as to all shares subject to it only if our market capitalization increases to $650.0 billion and 12 of 16 total operational milestones are achieved during such 10-year period. Each tranche of 1/12th of the total number of shares subject to the option becomes vested and exercisable each time: (i) our market capitalization increases initially to $100.0 billion for the first tranche, and by an additional $50.0 billion for each tranche thereafter; and (ii) one of 16 specified operational milestones relating to total revenue or adjusted EBITDA (other than any operating milestone that previously counted towards the vesting of another tranche) is attained, subject to Mr. Musk’s continued service to us as either CEO or as both Executive Chairman and Chief Product Officer, with the CEO reporting to him, at each such vesting event. This award was designed to be entirely an incentive for future performance that would take many years, if at all, to be achieved. Further, each of the requirements underlying the performance milestones was selected to be very difficult to achieve. If any options have not vested by the end of the term of the option award, they will be forfeited and Mr. Musk will not realize the value of such options. As of April 29, 2021, six of the 12 tranches under the 2018 CEO Performance Award have vested and become exercisable, subject to Mr. Musk’s payment of the exercise price of $70.01 per share and the minimum five-year holding period generally applicable to any shares he acquires upon exercise. See “*Compensation Discussion and Analysis—Chief Executive Officer Compensation—2018 CEO Performance Award*” under this Item 11 above. |