Tuesday, August 2, 2016

Musk’s SolarCity Offer Wipes Out His Cousins’ Stock Options

  • Will Tesla-SolarCity Deal Pay Off for Investors?
  • Awards will be cancelled if $2.6 billion deal closes
  • Lyndon and Peter Rive are among 15 top-paid U.S. executives

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Tesla Motors Inc.’s $2.6 billion offer for SolarCity Corp. is wiping out stock awards given to Elon Musk’s cousins.

Lyndon and Peter Rive, who serve as the chief executive and chief technology officer of SolarCity, were granted combined stock options of about $128 million in the San Mateo, California-based solar company in September, placing them among the 15 highest-paid U.S. executives in 2015, according to the Bloomberg Pay Index. The options will be canceled for no consideration, according to a Monday regulatory filing.

The awards are nearly identical to those offered to Musk at Palo Alto, California-based Tesla in 2012. The billionaire is the chairman and largest shareholder of both companies. Under the awards’ terms, the Rives would have had 10 years to earn the options by achieving sets of goals, with half tied to SolarCity’s stock price and half tied to operational results such as increasing customers, and lowering the cost of generating solar wattage. Every time the company achieved a target in both categories, they would earn 1/10th of the options.

Jonathan Bass, a spokesman for SolarCity, said the company had no further comment beyond the filings.

Musk initially offered $26.50 to $28.50 a share in Tesla stock, which was criticized as a “bailout” for the solar company by Angelo Zino, an analyst at S&P Global Market Intelligence. Investors in SolarCity said that the bid was too low, while Tesla shareholders questioned the wisdom of Musk combining his electric-carmaker with the clean-energy company.

Under the new agreement, SolarCity investors will receive $25.37 a share in Tesla stock. The deal, which allows SolarCity to solicit competing offers through Sept. 14, now goes to the companies’ shareholders for approval.

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