Sold 10.1 Million Shares in Recent Weeks
Number of Shares Held Increased by 564,000 Compared to Before
The Secret Is Stock Option Exercise
[Asia Economy Reporter Kwon Jae-hee] Elon Musk, CEO of Tesla, sold a large amount of company stock, but his ownership stake actually increased, CNN reported on the 5th (local time).
According to the report, an analysis of documents Musk submitted to securities authorities revealed that although he sold 10.1 million Tesla shares in recent weeks, the number of shares he holds increased by 564,000 compared to before the sale.
Since Musk posted a sudden tweet on the 6th of last month asking his Twitter followers to "decide whether to sell 10% of Tesla shares," he has been selling a large portion of his stake.
CNN reported that Musk has sold 10.1 million shares so far. This is about 7 million shares less than the amount Musk had promised to sell.
Nevertheless, Musk’s Tesla stake increased because he exercised stock options that allow him to buy Tesla shares while selling stock.
In particular, through these stock options, Musk is purchasing Tesla shares at $6.24 per share. This is less than 1% of Tesla’s market price (approximately $1,015 as of the closing price on the 3rd).
Since Musk posted the tweet about selling shares last month, he has exercised 10.7 million stock options. These stock options expired in August 2022, so regardless of the survey results, Musk had to exercise them before then.
Additionally, Musk received stock options last year to buy up to 108 million Tesla shares at $70.01 per share. Although there were conditions that Tesla’s performance had to exceed a certain level and the stock price had to surpass target prices, Tesla’s stock price rose 743% last year, so the stock price targets have already been met.
However, Musk must pay taxes due to exercising stock options.
The federal income tax imposed on Tesla shares purchased after the 8th of last month amounts to about $5 billion (approximately 5.9 trillion KRW). CNN estimated that state taxes would also be imposed on top of this.
According to documents Musk submitted, he sold Tesla shares this time to cover these taxes.
Musk also holds additional stock options that will expire next year, and it is expected that he will exercise these as well. These amount to 12.2 million shares, and even if he sells 5.3 million shares to cover tax payments, he will still secure nearly 7 million more Tesla shares, CNN explained.
If Musk exercises all the stock options that will expire soon, the number of stock option shares will decrease by about 22.9 million compared to now.
However, besides this, Musk still holds stock options to purchase an additional 50.7 million shares, and since these stock options expire in January 2028, CNN does not expect him to exercise them anytime soon.
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