Tesla 2016 Annual Report Download - page 69
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Please find page 69 of the 2016 Tesla annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Beginningin2015ourexpectedvolatilityisderivedfromourimpliedvolatilityonpubliclytradedoptionsofourcommonstockandthehistoricalvolatility
ofourcommonstock.Priorto2015,ourexpectedvolatilitywasderivedfromourimpliedvolatilityonpubliclytradedoptionsofourcommonstockandthe
historicalvolatilitiesofseveralunrelatedpubliccompanieswithinindustriesrelatedtoourbusiness,includingtheautomotiveOEM,automotiveretail,automotive
partsandbatterytechnologyindustries,becausewehadlimitedtradinghistoryonourcommonstock.Whenmakingtheselectionsofourpeercompanieswithin
industriesrelatedtoourbusinesstobeusedinthevolatilitycalculation,wealsoconsideredthestageofdevelopment,sizeandfinancialleverageofpotential
comparablecompanies.Ourhistoricalvolatilityandimpliedvolatilityareweightedbasedoncertainqualitativefactorsandcombinedtoproduceasinglevolatility
factor.
Theweighted-averagegrant-datefairvalueforoptionawardsgrantedduringtheyearsendedDecember31,2015,2014and2013was$108.28,$94.01and
$40.72pershare.Theweighted-averagegrant-datefairvalueforESPPgrantedduringtheyearsendedDecember31,2015,2014and2013was$58.77,$74.07and
$19.22pershare.ThefairvalueofRSUsismeasuredonthegrantdatebasedontheclosingfairmarketvalueofourcommonstock.
Performance-Based Stock Options
In2014,tocreateincentivesforcontinuedlongtermsuccessbeyondtheModelSprogramandtocloselyalignexecutivepaywithourstockholders’
interestsintheachievementofsignificantmilestonesbyourcompany,theCompensationCommitteeofourBoardofDirectorsgrantedstockoptionstocertain
employeestopurchaseanaggregate1,073,000sharesofourcommonstock.Eachsuchgrantconsistsoffourvestingtrancheswithavestingschedulebasedentirely
ontheattainmentoffutureperformancemilestones,assumingcontinuedemploymentandservicetousthrougheachvestingdate.
·1/4thofthesharessubjecttotheoptionsarescheduledtovestuponcompletionofthefirstModelXProductionVehicle;
·1/4thofthesharessubjecttotheoptionsarescheduledtovestuponachievingaggregatevehicleproductionof100,000vehiclesinatrailing12-
monthperiod;
·1/4thofthesharessubjecttotheoptionsarescheduledtovestuponcompletionofthefirstGenIIIProductionVehicle;and
·1/4thofthesharessubjecttotheoptionsarescheduledtovestuponachievementofannualizedgrossmarginofgreaterthan30.0%inanythreeyears
AsofDecember31,2015,thefollowingperformancemilestonewereachievedandapprovedbyourBoardofDirectors.
·CompletionofthefirstModelXProductionVehicle
Webeginrecordingstock-basedcompensationexpenseaseachmilestonebecomesprobable.AsofDecember31,2015,wehadunrecognizedcompensation
expenseof$68.7millionforthoseperformancemilestonesthatwerenotconsideredprobableofachievement.FortheyearsendedDecember31,2015and2014,
werecordedstock-basedcompensationexpenseof$10.4millionand$10.7millionrelatedtothisgrant.
2012 CEO Grant
InAugust2012,ourBoardofDirectorsgranted5,274,901stockoptionstoourCEO(2012CEOGrant).The2012CEOGrantconsistsoftenvesting
trancheswithavestingschedulebasedentirelyontheattainmentofbothperformanceconditionsandmarketconditions,assumingcontinuedemploymentand
servicetousthrougheachvestingdate.
Eachofthevestingtranchesrequiresacombinationofoneofthetenpre-determinedperformancemilestonesoutlinedbelowandanincrementalincreasein
ourmarketcapitalizationof$4.0billion,ascomparedtotheinitialmarketcapitalizationof$3.2billionmeasuredatthetimeofthe2012CEOGrant.
·SuccessfulcompletionoftheModelXAlphaPrototype;
·SuccessfulcompletionoftheModelXBetaPrototype;
·CompletionofthefirstModelXProductionVehicle;
·SuccessfulcompletionoftheModel3AlphaPrototype;
·SuccessfulcompletionoftheModel3BetaPrototype;
·CompletionofthefirstModel3ProductionVehicle;
·Grossmarginof30%ormoreforfourconsecutivequarters;
·Aggregatevehicleproductionof100,000vehicles;
·Aggregatevehicleproductionof200,000vehicles;and
·Aggregatevehicleproductionof300,000vehicles.
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