Tesla CEO Elon Musk has sold a huge stake in his company over the past few weeks. However, his shares in Tesla rose by 564,000 shares, after the sell-off.
An analysis prepared by CNN and reviewed by Al-Arabiya.net showed that: Musk’s property in Tesla It did not decrease, despite his promise to get rid of 10% of his stake in Tesla, in a survey of his followers on Twitter, as Musk’s sales of shares until the end of last week amounted to 10.1 million shares, with 7 million shares remaining to reach the target percentage.
This comes as Musk, at the same time as he is selling shares, is exercising options to buy additional shares.
And Musk owns options that enable him to buy Tesla shares at $ 6.24 per share, which is much less than 1% of the market price of the shares currently, and during the last period, Musk exercised options to buy 10.7 million shares of Tesla.
And whether Musk polled his followers or not, he intended to exercise the purchase options, as they are due to expire by August 2022.
Tesla is also preparing to give Musk more options, after revealing its upcoming financial results, and the reason he is the richest man on the planet is due to his stake in Tesla.
Taxes, not Twitter
CNN’s analysis revealed that the real reason behind Musk’s sale of shares in Tesla, is not to poll his followers, as the exercise of stock options is subject to income tax, which costs billions of dollars, as these options are one of the forms of income that he received as a reward for his CEO presidency of an industry giant. Electric cars.
Musk owes about $5 billion in federal income taxes on new shares he’s purchased since November 8, so the stock sales were essentially covering the volume of tax claims, according to the disclosures.
Musk also plans to exercise additional options due to expire next year, as he still has 12.2 million options that will expire soon that he has not yet exercised.
If past practice is any indication, Musk will have to sell about 5.3 million of those newly acquired shares to cover his tax bill. But that would leave him with nearly 7 million more shares than he has today.
Once the options that will expire soon are exercised, the number of stock options that Musk owns will be reduced by 22.9 million, but he will still have another 50.7 million options that will allow him to buy many additional shares, although the exercise price of those options will be higher than what was exercised, which he obtained The new options will not expire in 2012, and the new options will not expire before January 2028.
More options on the way
The number of options that Musk holds is likely to grow exponentially in the coming year.
Musk’s remuneration package is designed across 12 different sets of bonuses, to be earned once the company achieves certain financial performance and market value goals. With the company now worth $1 trillion, the market cap targets have already been met, so it’s a matter of revenue and profit targets.
According to estimates, Musk will soon be entitled to 8.4 million stock options, which represent 3 sets of bonuses, bringing the total of new options that Musk gets to 25.3 new options, which is more than compensation for the options he is currently exercising. The company’s filings also indicate that it is “likely” that the required financial goals will be achieved soon.
Analysts agree that Musk could qualify for one block of 8.4 million options with fourth-quarter results, and two more with first-quarter 2022 results, according to Wall Street forecasts.