Tesla’s $2.6 billion offer for SolarCity is draining the stock awards given to Lyndon and Peter Rive, who are both cousins of Elon Musk. According to the Bloomberg Pay Index, in September, Peter and Lyndon Rive, who serve as the chief technology officer and chief executive of SolarCity, respectively, were granted combined stock options of about $128 million in the San Mateo, California-based solar company.
No more stock options for Rive cousins
The index shows that this combined stock option placed Peter and Lyndon Rive among the 15 highest-paid U.S. executives in 2015, but according to a regulatory filing on Monday, the options will be canceled for no consideration. The awards were similar to those offered to Musk at Tesla in 2012. Musk, who is the chief executive of Tesla, is also the chairman and largest shareholder of both companies.
As per the award’s terms, his cousins would have had 10 years to earn the options by achieving sets of goals, with half tied to operational results such as lowering the cost of generating solar wattage and increasing customers and half tied to SolarCity’s stock price. The Rives would have earned 1/10th of the options every time the clean-energy company achieved a target in both categories.
The solar company had no further comment beyond the filings, said Jonathan Bass, a spokesman for SolarCity.
Tesla, SolarCity deal awaiting approval
On Monday, the companies said that SolarCity has agreed to Tesla’s $2.6 billion offer. Tesla’s offer represented about half of the value of SolaCity a year ago, reflecting the slowing growth, the solar company’s complex financial structure, and increased scrutiny of government incentives for rooftop solar.
Initially, Musk offered $26.50 to $28.50 a share in Tesla stock for the solar firm, but Angelo Zino, an analyst at S&P Global Market Intelligence, censured the offer as a “bailout” for the solar company. However, Musk believes SolarCity’s acquisition offers Tesla the promise of greater economies of scale in battery production, electrical energy management systems and marketing.
Tesla shareholders questioned Musk’s wisdom in combining his EV firm with the solar company, while SolarCity investors said the bid was very low. SolarCity investors will get $25.37 a share in Tesla stock under the new agreement. The deal, which allows the clean-energy company to solicit competing offers through Sept. 14, is now awaiting approval from shareholders of both companies.
On Monday, SolarCity shares closed down 7.42% at $24.72. Year to date, the stock is down more than 51%, while in the last year, it is down more than 57%.