- Tesla chief Elon Musk has exercised all of his options due to expire next year, suggesting the end of a string of stock sales
- Musk has sold US$16.4 billion (A$22.6 billion) worth of shares since early November, when he floated selling 10 per cent of his Tesla stake in a Twitter poll
- That lead to a drop in Tesla’s share price, which rebounded last week when Musk said he would finish selling shares after his programmed sales have ended
- Musk was originally issued the options in 2012, which allowed him to purchase Tesla shares in November for just US$6.24 (A$8.60) each
- Democrats have proposed a surtax on income and capital gains taxes that could take effect next year — exercising the options could avoid the higher rate
Tesla chief Elon Musk has exercised all of his options due to expire next year, suggesting the end of a string of stock sales that caused shares in the world’s most valuable carmaker to slide.
Musk has sold roughly US$16.4 billion (A$22.6 billion) worth of shares since early November, when he said he would sell 10 per cent of his Tesla stake if Twitter users backed the idea — which they did.
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.
— Elon Musk (@elonmusk) November 6, 2021
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Two days before the poll, Tesla shares hit a record high of around US$1230 (A$1695) thanks partly to a major car order from rental company Hertz.
In the weeks following the poll, however, Tesla shares dropped by almost a quarter but rebounded last week when Musk said he would be finished selling shares after his programmed sales have ended.
He set up the prearranged plan in September for stock sales related to options expiring next year, and Tesla said in a filing on Tuesday that the program was complete. The final trades included exercising an option on 1.6 million shares, 934,090 of which will be sold to pay taxes.
It was in 2012 that Musk was originally granted the stock options, and which vested when Tesla achieved certain milestones related to market capitalisation and other metrics. However, he did not have to pay taxes on the vested options until he exercised most of them in November this year.
He exercised options to purchase almost 23 million shares at US$6.24 (A$8.60) each, a fraction of the company’s last closing price of US$1077.03 (A$1484.52) on Wednesday.
Notably, Democrats — who control Congress — have proposed a surtax on income and capital gains taxes that could take effect next year.
“Exercising the options in 2021 would avoid the increased taxes next year,” said Steve Rosenthal, a senior fellow in the Urban-Brookings Tax Policy Centre.
In total, Musk has sold 15.7 million shares in Tesla — approximately the 10 per cent stake he’d pledged to offload.