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Vice President of American carmaker Tesla Jerome Guillen poses at the Paris Motor Show on the last day of the press on 3 October 2014. The Paris Motor Show opens to the public on Saturday.
Eric Piermont | AFP | Getty Images
Former Tesla executive Jerome Guillen sold more than $ 270 million worth of stock by exercising stock options after his departure on June 3, according to recent filings with the Securities and Exchange Commission.
Guillen became president of the automotive industry in the third quarter of 2018, overseeing all of Tesla’s automotive operations. During his tenure, the company opened its first overseas facility in Shanghai, expanded its battery cell supply partnerships, and began mass-producing the Model Y.
But Tesla also struggled with quality issues, recalls, and part shortages under Guillen that significantly limited production, as the company produced zero Model S and X vehicles in the first quarter of the year before it was removed from the role.
Tesla transferred him to the role of president of heavy trucking in March of this year, and in June Guillen left the company. The exact circumstances of his departure were not disclosed.
According to Ben Silverman, director of research at InsiderScore, the documents indicate that Guillen exercised options for 451,118 shares of Tesla and likely sold the underlying shares for gross proceeds of $ 274.1 million.
After that, Guillen still had 75,780 exercisable options, Silverman estimates.
Tesla executives receive no special treatment when they leave. In more formal terms, they are employees at will with no guaranteed liquidation or accelerated capital accrual if they resign or get laid off, Silverman noted.
According to InsiderScore analysis, Guillen had approximately $ 442 million in unearned options and unearned restricted stock when he left. Documents indicate that he also had 1,212 restricted shares which would be acquired just two days after his last day at Tesla and which would be worth nearly $ 700,000.
How the options work
Stock options give a company’s employees or executives the right to buy that company’s stock at a specified price for a limited period of time.
Executives of fast-growing technology companies often earn more by acquiring and exercising options than their salary. Some compensation plans allow them to award shares only after they have achieved certain milestones in the business, not just based on the time spent there.
When stock prices exceed the strike price, an employee or executive who acquired their stock can buy them and then sell them immediately to pocket the difference in cash, or they can exercise the options but retain them for the long term if they believe the value of the stock. shares will continue to rise.
Typically, exercising stock options involves taxes and sometimes other fees if the shareholder decides to keep or sell them immediately.
It is not clear why it sold
Guillen did not respond to a request for comment and did not speak publicly about his departure from Tesla or his personal investment strategy.
Silverman said of the former executive, “He may have had a narrow window of time to exercise his options or lose them. It may have been a” use or lose “situation that made him decide to buy and sell so much now. he’s no longer an insider. So he may not feel comfortable having so much exposure to the stock. It’s not entirely unusual. If you’re not an insider, you’ve lost your information advantage.
Meanwhile, Tesla has not announced the appointment of a new head of heavy haulage.
During an April 2021 earnings call, CEO Elon Musk said Tesla was “continuing development work on the Semi,” indicating that the company is nowhere near mass production of its debut, the heavy vehicle for which Guillen has been appointed in charge. Tesla first revealed the Class 8 Tesla Semi in November 2017.
In the same first-quarter earnings call, Musk talked about production delays for the company’s new large battery cell, the 4680, which Tesla has designed and aimed to produce on its own, in part to power its larger vehicles. the Semi and the next Cybertruck.
Musk said in April: “We have made some cells. We are not yet at the point where we think the cells are reliable enough to be shipped by car, but we are getting closer.” He said Tesla was still “pretty optimistic about achieving volume production of the 4680 next year.”
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