Elon Musk may have sold over 10 million shares of electric vehicle maker Tesla (NASDAQ: TSLA) over the past month, but the CEO has actually increased his overall holdings in the company since the start of his massive selloff. To date, Musk owns about 564,000 more shares than he did since he started offloading some of his personal TSLA stock.
Musk has so far sold about 10.1 million shares, though he still has about 7 million TSLA shares to sell to complete his target of selling off 10% of his stake in the company. As noted in a CNN Business report, however, an analysis of Musk’s filings has revealed that the CEO is actually not backing away from his holdings on Tesla at all.
This was because while Musk is offloading massive amounts of shares, he is also exercising options to purchase additional TSLA stock, which he is capable of doing at a huge discount. Musk has been able to buy TSLA stock at a bargain exercise price of $6.25 per share, which is well below 1% of the company’s current price in the market.
Since Musk posted a poll on Twitter last month asking the users of the social media platform if he should sell some of his TSLA holdings, the CEO has exercised options to purchase 10.7 million shares of the EV maker. It should be noted that the options were due to expire by August 2022 if Musk did not exercise them. Musk would likely exercise additional options that would be expiring next year as well, worth about 12.2 million TSLA shares.
Musk owes around $5 billion in federal income taxes on the new TSLA shares that he has purchased since posting his Twitter poll last month. He would likely also owe some amount of state taxes. The CEO’s filings suggest that part of the reason behind Musk’s selloff was to cover his tax hit.
Elon Musk’s current pay package for his CEO role in Tesla is a high-risk, high-reward system, as it provides him with no salary for his tenure as the leader of the company. Instead, Musk’s pay package was strictly performance-based, and it was designed to give him 12 blocks of options if the company meets its targets. With Tesla now valued at $1 trillion, Musk’s targets for Tesla’s market cap have already been accomplished. This suggests that Musk’s succeeding awards would now only be a matter of the company meeting its revenue and profit targets.
Disclaimer: I am long TSLA.