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In 2018, Tesla granted Elon Musk the largest equity award in history at the time (eclipsed only by Musk's 2025 grants), which vested based on tranches of market cap targets paired with other financial/operational goals. Whether due to Tesla's success or a copycat effect, this grant inspired a number of large, similarly designed awards contingent on market-based metrics, particularly within the early COVID years of 2020 and 2021. Overall, there were more nine-figure "moonshot" awards of this nature during those two years than all the years prior to 2020 and 2022-2025 combined.
Featured in coverage by The Wall Street Journal, this analysis takes a deep dive into the structure of the 20 largest grants from 2020 and 2021 (as defined below), as well as an update on how those awards are currently performing. For purposes of this study, we only included equity awards with a grant date fair value over $100M contingent on stock price or market cap performance granted to CEOs of U.S. public companies in 2020 and 2021. This includes a number of companies that granted such awards in connection with an IPO, including some grants that may have occurred shortly prior to the IPO date. The majority of award recipients were founder CEOs who had significant equity stakes but low levels of unvested equity, prompting the board to grant a new incentive to retain the individual for a number of years after going public instead of risking them cashing out and moving on to a new project.
Purpose of Grant
A majority of the grants in this study were made to incentivize post-IPO performance. Overall, 11 of the 20 grants (55%) were in this category. The remainder were a mixture of the following:
Award Vehicle
Out of the 20 grants, 12 (60%) were made in the form of full-value shares, and eight (40%) were made in the form of options. Given that these awards already required significant stock price growth to vest, it might seem like an exercise price feature would be unnecessary. However, compared to full-value awards, an option structure reduces the stock-based compensation expense for an equivalent dilution or allows for an increased share size for the same amount of stock-based compensation. In addition, an exercise price provides a stopgap in case the stock price reverses later after achieving targets earlier in the award's life.
Performance Period and Vesting Structure
One of the more variable aspects in award design was how to factor in retention safeguards in the form of time-based vesting criteria as a layer on top of achievement of performance targets within the performance period. The most common performance period was 10 years.
| Length of Performance Period | Number of Companies |
|---|---|
| 10 Years | 7 |
| 7 Years | 6 |
| 5 Years | 5 |
| 8 Years | 2 |
In most cases, tranches were eligible to vest during any part of the performance period based on a shorter measurement window (see Definition of Stock Price below); however, in a couple instances, the performance periods had exact measurement dates or had multi-year delays prior to the start of the official performance period, so tranches were not eligible to vest in the performance criteria outside of those windows.
In order to avoid scenarios where performance might be achieved too quickly, therefore risking the retention aspect of the award, most grants also included some form of time-based vesting and/or holding period, as follows:
| Additional Vesting | Number of Companies |
|---|---|
| Cliff vesting threshold that applies equally to all tranches | 6 |
| No vesting or holding period | 5 |
| Graded vesting starting later than the grant date | 4 |
| Graded vesting starting at the grant date | 3 |
| Additional vesting starting after earning a tranche | 1 |
| Holding period only | 1 |
In addition, six of the companies above had a holding period after a time-based vesting period.
Definition of Stock Price
In order to reduce the possibility of a short-term stock price spike causing a target to be achieved, companies employed a variety of stock price definitions, requiring the average stock price to be above a threshold over various lengths of time. The following measurement periods were used by the 20 companies, from shortest to longest:
| Measurement Period | Number of Companies |
|---|---|
| 5 days | 1 |
| 20 days | 3 |
| 30 days | 4 |
| 45 days | 1 |
| 60 days | 3 |
| 90 days | 3 |
| 180 days | 2 |
| 30 days and a longer period combined | 3 |
Size and Value
In light of the significant grant date fair value of the moonshot awards, most (75%) came with a company pledge to not make any further grants to the CEO for a number of years, most commonly five, seven or ten. The awards, broken into tranche opportunities, had a threshold opportunity representing earning one tranche, up to a maximum of earning all tranches. Most companies had targets equal to maximum, but a few had formal targets below maximum.
The following table shows the grant dilution at threshold, target and maximum achievement, as well as grant date fair value and maximum realizable value. In this case, maximum realizable value represents the intrinsic value of the maximum share count if the maximum stock price target is achieved. However, the actual take-home pay at maximum could be greater or lesser than this amount based on further stock price changes after vesting.
| Percentile | Threshold Dilution | Target Dilution | Maximum Dilution | Grant Date Fair Value | Value at Maximum Performance |
|---|---|---|---|---|---|
| 25th | 0.1% | 1.5% | 1.5% | $147,548,581 | $637,306,640 |
| 50th | 0.3% | 2.3% | 2.3% | $189,726,290 | $1,018,500,000 |
| 75th | 0.4% | 3.3% | 3.4% | $357,338,246 | $4,756,189,500 |
| Average | 0.3% | 2.7% | 2.8% | $263,145,719 | $2,551,763,836 |
Tranches
Companies divided awards into tranches with stepwise payouts, with no companies using linear interpolation. The number of tranches per award was as follows:
One company had "unlimited" tranches, with additional shares granted for each additional fixed amount of market cap improvement. Of the 19 awards with a fixed number of tranches, two had stock price targets paired with financial/operational targets, similar to the structure of the Tesla award. In addition, two of the 19 awards measured the same stock price targets multiple times by retesting the goals annually over a number of years, with the tranche weighting split evenly over the number of annual measurements.
Metrics and Targets
This analysis only included awards with market-based metrics, although these could be paired with other types of metrics. Overall, 18 of the 20 metrics were based on stock price, and two were based on market cap. For the two awards with paired tranches, one was paired with a revenue metric, and the other was paired with a mixture of financial and operational metrics.
Most companies disclosed all the stock price/market cap goals up front. For this analysis, market cap goals were converted into a stock price equivalent based on the shares outstanding at the time of grant. Threshold performance represents the minimum cumulative stock price growth from the date of grant required to earn the first tranche, while maximum performance represents the cumulative stock price growth required to earn the whole award. The distribution of stock price growth goals, as well as the implied market cap increase at maximum performance, were as follows:
| Percentile | Threshold Stock Price Growth | Maximum Stock Price Growth | Market Cap Increase At Maximum |
|---|---|---|---|
| 25th | 25% | 126% | $27,247,199,317 |
| 50th | 33% | 391% | $71,960,496,558 |
| 75th | 121% | 674% | $141,290,930,156 |
| Average | 83% | 480% | $97,741,730,850 |
Weightings and Rigor
One final key component in award design was how to structure the size of tranches from tranche to tranche, as well as the spacing between performance targets. For tranches, the simplest approach would be an equal weighting on each tranche; however, companies could also choose to frontload or backload weighting. Backloading is a more investor friendly feature, tying more shares to the most difficult targets and increasing the retention length of the award when performance is going well. However, backloading could create retention issues when grants become underwater to goals because it puts a larger portion of the award "out of range" to the executive.
Similarly, performance targets could be evenly spaced (i.e. 30% growth for tranche one, 45% growth for tranche two, 60% growth for tranche three, etc.), or have a spacing that gets progressively longer or shorter between tranches. An escalating difficulty structure would have a similar effect as weighting backloading.
The breakdown of tranche weighting was as follows:
| Tranche Weighting | Number of Companies |
|---|---|
| Even Weighting | 11 |
| Backloaded Weighting | 6 |
| Frontloaded Weighting | 2 |
| Mixed Weighting | 1 |
The breakdown of performance spacing was as follows:
| Performance Spacing | Number of Companies |
|---|---|
| Escalating Growth | 10 |
| Evenly Spaced Growth | 9 |
| Mixed Growth | 1 |
As shown in these results, a majority of companies employed the simplest design, and for those that didn't, they tended to use more investor friendly features.
Current Status
Given that all the grants in this study were made in 2020 or 2021 and have a performance period of at least five years, none of the grants have yet reached their performance period end date as of the date of this report. Equilar reviewed performance through December 3, 2025, and found that only seven of the 20 awards still have any remaining tranches. The following summarizes the outcome of the 13 awards with no remaining tranches:
| Current Status | Number of Companies |
|---|---|
| Award Fully Earned | 3 |
| Award Partially Earned Before Executive Resigned | 2 |
| Award Partially Earned Before Remainder Cancelled | 1 |
| Award Partially Earned Before Cancellation in Connection with Merger | 1 |
| No Tranches Earned Prior to Executive's Resignation | 2 |
| No Tranches Earned Prior to Cancellation in Connection with Merger/Bankruptcy | 2 |
| No Tranches Earned Prior to Voluntary Cancellation of Award | 2 |
For the seven awards with tranches remaining, six have achieved partial vesting and one is fully unvested.
Vesting Frequency
Tranches vest upon achievement of the stock price or market cap thresholds, as defined. While a tranche is only fully vested when performance and any time-based criteria are satisfied, for the purposes of this section, we captured when each tranche vested with regard to just the performance criteria relative to the grant date (i.e. year one starts at the grant date and ends on the first anniversary of the grant date). This only includes tranches where performance is considered "banked," so it wouldn't include achievement of targets prior to the performance period window of that tranche. The following table shows the frequency of tranche achievement within the first five years (for 2020 grants) or four years (for 2021 grants):
| Year | Companies With Any Tranches Earned | Tranches Earned (Cumulative) | Tranches Remaining |
|---|---|---|---|
| 1 | 8 | 13 | 125 |
| 2 | 9 | 19 | 119 |
| 3 | 12 | 25 | 113 |
| 4 | 12 | 38 | 100 |
| 5 | 13 | 41 | 97 |
Out of the 20 companies, 13 have earned at least a threshold payout to date. The tranches remaining is calculated with regard to the original award structure and doesn't take into consideration that several awards have since been cancelled and therefore cannot be earned any further.
Value Realized
The most common definition of value realized is the value of stock awards when all vesting criteria are satisfied, or the spread value upon exercise for options. For the purposes of this section, however, value realized is calculated as the intrinsic value of tranches where the performance criteria have been satisfied (excluding any time-based criteria), using the highest stock price target achieved (but excluding any subsequent changes).
| Percentile | Value Realized |
|---|---|
| 25th | $ - |
| 50th | $56,376,634 |
| 75th | $265,090,000 |
| Average | $193,781,554 |
Five of the 20 grants currently have value realized greater than the original grant date fair value.
Outstanding Tranches
A major risk with moonshot awards is that if they fall too far underwater and lose their retentive value, it's a greater cost for the executive given that most of them aren't going to receive any additional annual equity grants for several years. As previously noted, 13 of the 20 awards are either fully vested or cancelled, leaving only seven outstanding. However, these remaining awards show that even when awards have had some vesting occur, the stock price can fall below previously achieved levels, making vesting in any additional tranches doubtful. For the seven remaining grants, one only discloses stock price targets upon achievement; the other six need the following amount of stock price growth (as of December 3, 2025) to vest in the next tranche:
These figures show that one company is fairly close to the next target, two have a moderately difficult path and three are deeply underwater.
Conclusion
This analysis shows that it's been somewhat of a mixed bag for companies that chose to grant moonshot awards in 2020 or 2021. Stock price performance from grant date to the present for these companies has been moderate, with cumulative declines for eight companies, a median growth of 19% and an average growth of 26%. Only two companies have achieved greater than 100% stock price growth, so most haven't achieved the large outperformance the awards were designed to motivate. In addition to stock price performance, a majority of awards didn't serve their retention goals as evidenced by the various resignations and award cancellations. Some companies disclosed that they were cancelling the award early in order to revert to an annual grant structure for the executive to help regain a baseline level of incentive.
Lastly, shareholder response to these awards has been fairly negative. Looking at just the nine companies that made grants outside an IPO situation, three failed their next SOP vote, three more fell between 50%-70% and one was above 90% (two others didn't hold a SOP vote).
Given all these factors, it makes sense that the rate of moonshot awards has somewhat declined after 2021, although they're still being made at a greater rate than pre-COVID. While many of these awards have not performed as well as hoped, for the seven remaining awards, there are still several years left in the term of the awards so the book is out on how well they'll ultimately perform.
Senior Director of Research Services at Equilar
Andrew Gordon, Senior Director of Research Services at Equilar, authored this post. Please contact Amit Batish, Senior Director of Content & Communications, at abatish@equilar.com for more information on Equilar research and data analysis.
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