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An analysis of his filings shows Musk is not backing away from his holdings in Tesla, despite his promise to follow a poll he sent to his Twitter followers, who called on him to sell 10% of his stake. So far he’s sold 10.1 million shares — about 7 million shares short of the goal.
That’s because at the same time he is selling shares, he’s also exercising options to buy additional stock. And he’s doing so at a bargain exercise price of $6.24 a share, well below 1% of Tesla (TSLA)‘s current share 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 would have done so with or without the poll — the options were due to expire by August of 2022 if he didn’t exercise them.
Whenever he exercises options, he becomes subject to a large income-tax hit because he received those options as his primary form of compensation.
He owes about $5 billion in federal income taxes on the new shares he has purchased since November 8. He also will probably owe some amount of state taxes. Musk sold off Tesla stock specifically to cover that tax hit, according to the filings.
Musk also plans to exercise additional options that are set to expire next year. He still has 12.2 million of those soon-to-expire options that he has not yet exercised.
If past practice is any indication, he’ll sell about 5.3 million of those newly acquired shares to cover his tax bill. But that will still leave him with nearly 7 million more shares than he has today.
Musk is keeping most of the shares he’s acquiring, rather than selling them all, as other executives have been known to do when exercising options, including Robyn Denholm, the chair of Tesla’s board.
Once he’s done with these soon-to-expire options, Musk will have 22.9 million fewer options than he had at the start of this process. But he’ll still have 50.7 million other options that will allow him to buy that many additional shares, albeit at a higher exercise price than…
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Source : cnn
