2004

Board of
BUT
STILL.. THE
Directors

CONTROL REMAINED
WITH ELON MUSK
Held 36% of shares
CEO and Chairman
Control on Strategic
and
Transition
Technological
decisions
At every
ofstage
Boardofcomposition
Brad
: Start-up
Buss was
to a formal public organization.
Co-founders removed,
Ehrenpreis
funding, a
Clean
lead tech ; Gracias
appointed
Material
as the Science;
first
Jurvetson Financial
Kimbal Musk was
Control
over
Financing
Operations;
investor was
granted a
fully
independent
brought in.
Kohler
seat -onOperational
the board. Expertise.

director.

What was expected

As Tesla grows, composition to become
more consistent with other public
traded companies.

VCs might step down after their stake

has been sold.
VCs might be replaced by conventional
directors.

NOW

Board of
Directors..

COMMITTEE
MEMBERS

tl t

Board of Directors
The board retires in a staggered manner. This

combination is widely associated with inferior board

performance and 24.7% of U.S. companies are
flagged for this. The combined effect of this
mechanism reduces board accountability to its
shareholders.
No fully Independent audit committee (as against
99.7% of the companies in this industry).
Failing to split the roles of CEO and Chairman.
The Elon Musk Revocable Trust dated July 22, 2003
is a limited partner of Draper Fisher Jurvetson Fund
X, L.P., with a subscription commitment of $250,000.

Board of
Directors
Mr. Ehrenpreis is Executive VC of F&A and CFO of
Cypress semiconductors, which supplies certain
components for Model S.

Super majority vote required for corporate actions:

(1) vote on the election or removal of directors or the
timing or
length of their term of office or
(2) nominate directors or propose other action to be voted
on by
shareowners or

Anti-takeover strategies
Staggered board with three classes of directors
Blank check preferred stock without shareholder approval

Limitations on the ability of shareholders to call a special meeting

Advance notice of shareholder proposals for business conducted at

shareholder meetings
Daimler - right of first refusal
Musk - not to transfer shares to any automobile manufacturer or

vote in others favour without Daimlers consent

Restrictive covenants by U.S. Department of Energy

Current strategies
Limited voting rights of common shares
Supermajority(66.67%) required to amend certain charter

and certain bylaw provisions

Board is authorized to increase or decrease the size of the

board without shareholder approval

Limiting the liability of, and providing indemnification to,

the directors and officers

Shareholders cannot call special meetings

Why is TESLA targeted?

Electric vehicle market remains untested in the United

States
Intellectual property, powerful brand image, and industryleading products will make it a very attractive
Some states, like Kansas, dont allow direct-factory Sales
of automobiles but require a brick-and-mortar dealership
within the state
Even with a great business model, not every business can
make it alone
Going to take much more debt which will imperil its long
term viability

C O M P EN S ATIO N

Facts of the case

Executive compensation at Tesla is

heavily skewed toward equity-based

pay.
Not inconsistent with that awarded
at other technology companies in
Silicon Valley.
Half of the stock option awards
granted to Musk in 2009 contain
basic time-based vesting and the
other half is performance based.

W hat w e m ight expect

As long as Musk remains CEO, the

mix of compensation might continue

to skew heavily toward equity linked
rewards.
As Tesla becomes a more mature
company, it is likely to adopt
executive compensation packages
that are more conventional in
structure.

THANK YOU