Elon Musk had a twitter poll to determine if he will sell 10% of Tesla. The poll was 58% for yes Elon should sell 10% of his Tesla shares.
Elon has about 170 million shares of Tesla. This sale will be 17 million shares.
Elon had 22.8 million stock options awarded to him from a 2012 CEO compensation plan. He met the objectives of the plan which included things like raising the value of the company by ten times.
The options must be exercised by August 2022 or they will expire worthless. Those exercised options will cause Elon to owe about $15 billion in taxes.
Sell 17 million in shares for $20-21 billion and pay $6 billion in taxes on long-term capital gains. Exercise the options and pay the $15 billion in taxes. Have nothing left over if the stock price does not move around too much. Elon will still have a net gain of 5.8 million more shares of Tesla after the options are converted and the stock was sold to pay taxes.
The more likely scenario would be for Elon to exercise the option immediately and then sell those shares. This would avoid getting more taxes by selling any of his current shares. The taxes on the exercised options are unavoidable.
It would appear the most efficient manner would be to exercise and sell the 22m shares or else you’d be taxed twice (once on your initial sale and again at option exercise).
And why not just sell 1/2 your exercised shares and keep the rest? Already paying $11-12B in taxes. https://t.co/m1Je1PHa1E
— Dave Lee (@heydave7) November 7, 2021
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.
Do you support this?
— Lorde Edge (@elonmusk) November 6, 2021
3/ Elon’s 22.8M options at $6.24/option expire 8/13/22 ($15B needed @ 53%). A non-dilutive sale of 2% of $TSLA stock to pay for that options exercise and taxes due doesn’t change $TSLA intrinsic value or anyone’s PT. It may have a 1-2 day liquidity effect but it’s just noise.
— Gary Black (@garyblack00) November 7, 2021
SOURCES- Elon Musk, Gary Black, David Lee Investing
Written by Brian Wang, Nextbigfuture.com
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.
