SpaceX founder and CEO Tesla Elon Musk holds a helmet when he visits the construction site of the Tesla Gig plant in Grunheide, near Berlin, Germany, on May 17, 2021.
Michele Tantusi Reuters
Elon Musk last year launched a flow of stock sales, option exercises, tax sales and stock donations totaling nearly $ 22 billion. Yet even after unloading so much Tesla shares, he still owns a larger stake in the company, thanks to his compensation package.
Last year, Musk sold $ 16 billion worth of shares and, according to a statement to the U.S. Securities and Exchange Commission on Monday, donated 5 million shares in November worth nearly $ 6 billion to an undisclosed charity or recipient. Sales and gifts bring him a total of about $ 22 billion – a combination of tax payments in his pocket and a gift.
However, due to the nature of option exercises, Musk actually ended the year with a larger stake – and more stock – in Tesla. In 2012, Musk received options on 22.8 million shares worth about $ 28 billion last fall when he began selling.
Option exercises work so that Musk was the first to convert 22.8 million options into stocks. The option price was only $ 6.24, so he could pay $ 6.24 for each option and get a stake in shares of Tesla that traded more than $ 1,000 last fall.
With each conversion option, he simultaneously sells shares to pay taxessince options are taxed as income. Even as he unloaded billions of dollars in shares to pay taxes, he amassed even more shares at a lower option price – thus increasing his ownership of the company.
In total, Musk sold 15.7 million shares for $ 16.4 billion. Add to that the donated shares, and it unloaded a total of 20.7 million shares. However, he gained 22.8 million shares through options, leaving him another 2 million shares of Tesla at the end of the year. He currently owns 172.6 million shares, giving him a 17% stake in the company, making him by far not the largest individual shareholder.
Musk began his stock business with a November 6 polltelling his followers: “A lot has been done lately on unrealized profits, which are a means of tax evasion, so I propose to sell 10% of my Tesla shares. Do you support that?” Musk promised to follow the results of the poll, in which 58% were in favor of the sale and 42% against.
He eventually made a promise to sell 10% of his stake. But he got even more at the expense of options, which gave him a round trip, which gave him billions in cash, the largest single tax in U.S. history and even more Tesla shares.
Mask’s property – and a fortune of $ 227 billion – is likely to grow again in the future. His next big pay package, which could be even bigger than the 2012 premium, ends in 2028.