Are These Tesla Motors Inc. Stock Option Grants Giving Away Too Much?

A Fool takes a closer look at the car company’s Form 4 filings and finds answers in the footnotes.

Feb 1, 2014 at 3:01PM

How generous is Elon Musk? Plenty. He recently granted hundreds of thousands of Tesla Motors (NASDAQ:TSLA) stock options to a handful of the car company's senior executives. Yet it's a surprisingly good deal for shareholders, as Fool contributor Tim Beyers says in the following video.

You wouldn't know it from the size of the grants. Chief Technical Officer J. B. Straubel received 220,000 options to buy shares at a strike price of $139.34 at various points over the next decade. VP of production Gregory Reichow took home 65,000 options at the same strike price. CFO Deepak Ahuja and VP of worldwide sales and service Jerome Guillen split 100,000 more in options awards.

But there's also a catch: Tesla grants performance stock options, exercisable only when certain conditions are satisfied. What conditions? The footnotes in the various Form 4 disclosures aren't that specific. Even so, investors should take the grants as a bullish sign, Tim says, because it shows that Musk is fostering a culture that rewards outperformance, rather than time served in the same job.

Now it's your turn to weigh in. Would you have been as generous with Tesla's stock options grants? Why or why not? Please watch the video to get Tim's full take, and then leave a comment to let us know whether you would buy, sell, or short Tesla stock at current prices.

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Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Netflix at the time of publication. Check out Tim's web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends and owns shares of Netflix and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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