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How Elon Musk sold 10 million Tesla shares and increased the amount of Tesla shares held


An analysis of his records shows Musk isn’t backing down from his stake in Tesla, despite his promises follow a poll he sent to his Twitter followers, who urged him to sell his 10% stake. So far, he has sold 10.1 million shares – about 7 million shares short of target.
That’s because at the same time selling stocks, he also exercise options to buy more shares. And he is doing so at a bargain price of $6.24 a share, less than 1% of Tesla (TSLA)current stock price. Since Musk’s Twitter poll on November 6, he has exercised options to buy 10.7 million shares of Tesla. To be clear, he will do so with or without the poll – the options expire in August 2022 if he doesn’t exercise them.
Whenever he makes choices, he becomes the object of a large income tax because he took those options as his primary form of compensation.

He owes about $5 billion in federal income taxes on new shares he’s purchased since Nov. 8. He’ll likely owe some state taxes, too. According to the filing, Musk sold off Tesla stock to offset that tax.

Musk also plans to exercise additional options that are supposed to expire next year. He still has 12.2 million expiring options that he hasn’t exercised yet.

If previous practice is any indication, he will sell about 5.3 million of his newly acquired shares to cover his tax bill. But that would still make him nearly 7 million more shares than he is now.

Musk is keeping most of the shares he has acquired, rather than selling them all, as other executives have been known to exercise options, including Robyn Denholm, chairman of the board of directors of Tesla.

After exercising these expiring options, Musk will have 22.9 million fewer options than he did at the start of the process. But he would still have another 50.7 million options that would allow him to buy many of those additional shares, albeit at a higher actual price than the options he was buying. He’s unlikely to do them anytime soon, as almost none of those options expire until January 2028.

More options on their way

The number of options Musk holds is likely to grow significantly over the next year.

Musk’s salary package is designed to give him 12 different option blocks when the company hits certain financial performance and market value goals. With the company now worth $1 trillion, all market value goals have been accomplished, so it’s a matter of revenue and profit targets to be achieved.

Tesla has taken into account 3 additional blocks out of 8.4 million options, each of which will soon come to Musk, for a total of 25.3 new choices, more than the ones he is currently working on collectively. sex. Company filings indicate that it is “likely” to achieve the required financial goals soon.

Analysts agree. Musk could qualify for one block of the 8.4 million picks with fourth-quarter results and another two blocks with first-quarter results in 2022, according to Wall Street consensus forecasts. And if analysts’ estimates are correct, he could get another 8.4 million options in Q2 or Q3 of 2022, and another blog in early 2023.

Additional sales

Musk sold the 5.4 million Tesla shares he previously trusted to hold within three days of completing his Twitter poll.

Elon Musk Wouldn't Be The Richest Man In The World Without American Taxpayers

Most of the shares sold in those transactions are presumably shares he has held since the company’s 2010 IPO. So nearly all of the $5.8 billion he received on those purchases was presumably assessed as long-term capital gains, taxed at the lower 20%, not the rate. the higher tax he would pay on exercising the options.

To reach his goal of selling the 10% of Tesla stock he owns as of poll date, he may need to sell about 2 million more shares to cover the tax bill for the 12 million additional Tesla options. me.

But even if he does, with more options coming his way, he’s still likely to hold a larger stake in Tesla than he did when he started the process.

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