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Elon Musk has dumped billions of Tesla shares – and still owns more than last year

SpaceX founder and Tesla CEO Elon Musk holds a helmet as he visits the Tesla Gigafactory construction site in Grünheide, near Berlin, Germany May 17, 2021.

Michel Tantussi | Reuters

Last year, Elon Musk launched a stream of sales of stocks, options, tax payments, and gifted stocks totaling almost $22 billion. However, even after selling so many Tesla shares, he still owns more of the company thanks to his compensation package.

Musk sold $16 billion worth of shares last year and, according to a filing with the U.S. Securities and Exchange Commission on Monday, donated 5 million shares worth nearly $6 billion to an unknown charity or recipient in November. Sales and gifts bring him a total of approximately $22 billion, a combination of tax payments, cash in his pocket, and a gift.

However, due to the nature of options experimentation, Musk effectively ended the year with a larger stake — and more stock — in Tesla. In 2012, Musk received options for 22.8 million shares worth about $28 billion last fall when he started selling.

The way options work is that Musk was the first to convert 22.8 million options into shares. The options exercise price was only $6.24, so he could pay $6.24 for each option and get a share of Tesla stock, which was worth more than $1,000 last fall.

On each option conversion, he will simultaneously sell the shares to pay taxes, since the options are taxed as income. Even as he sold billions of dollars of stock to pay taxes, he accumulated even more shares at a low option price, thereby increasing his stake in the company.

In total, Musk sold 15.7 million shares worth $16.4 billion. Add to that the donated shares and he gets rid of 20.7 million shares. However, he received 22.8 million shares by exercising the options, leaving him with another 2 million Tesla shares by the end of the year. He currently owns 172.6 million shares, giving him a 17% stake in the company, making him the largest individual shareholder.

Musk got his start in the stock business with a poll on November 6, telling his followers, “Lately, a lot has been made of unrealized profits as a means of avoiding taxes, which is why I propose to sell 10% of my Tesla shares. Do you support it?” Musk promised to follow the results of the poll, which resulted in 58% in favor of the sale and 42% against.

He eventually made good on his promise to sell 10% of his stake. But he got even more back with stock options that gave him billions in cash, the largest single tax payment in US history, and even more Tesla stock.

Musk’s property and $227 billion fortune is likely to rise again in the future. His next big cash package, which could be even bigger than 2012, expires in 2028.


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