Tesla Inc CEO Elon Musk unloaded US$5 billion of stock in the electric automaker shortly after holding a poll on Twitter over whether he should sell 10 percent of his massive stake in the company.
The world’s richest person so far has disposed of more than 4.5 million shares this week, regulatory filings on Wednesday showed. Those were his first sales in more than five years.
Musk, who frequently posts on Twitter and often engages in controversial topics, created a firestorm over the weekend with the survey about whether he should sell part of his Tesla stake — which he connected back to a debate about whether the ultra-wealthy are paying their fair share of taxes.
Photo: Reuters
The poll, which resulted in a decisive vote for him to sell, sent shares of the automaker down 16 percent in two days as investors worried about the consequences of unloading such a large block of stock.
On Monday, Musk offloaded about US$1.1 billion worth of stock to pay income taxes on equity options that he also exercised that day, two of the filings showed. Those transactions were made based on a prearranged trading plan adopted in mid-September.
Earlier this week, he carried out the remaining sales. The filings detailing those disposals did not indicate that they were preplanned.
The documents shed no light on whether Musk’s weekend Twitter poll had any bearing on his decision to carry out some or all of the transactions, or whether he would continue selling until he has met the 10 percent threshold. To get there, he would need to sell roughly 17 million shares, and even more if he includes exercisable options in his total holdings.
The options Musk exercised came from a significant award he received in 2012. He would have had to exercise them before next August before they expired.
Taxes on such transactions are usually covered by immediately disposing of some of the newly acquired shares.
Earlier this year, Musk said publicly that he likely would exercise options earned from the 2012 award in the near future.
It is possible that the option exercises and related sales would have been executed regardless of the Twitter poll’s outcome, given that they were made under a prearranged plan.
However, the terms of such plans are not subject to public disclosure, and executives have wide latitude to cancel or modify them at any time.
Regardless, the headline-grabbing Twitter referendum pummeled Tesla’s shares on Monday and Tuesday, wiping out US$50 billion from Musk’s net worth. Tesla rose 4.3 percent on Wednesday to close at US$1,067.95, paring losses this week to less than 13 percent.
The billionaire last sold shares in 2016, when he exercised options and liquidated some of the newly acquired stock to cover about US$590 million in income taxes.
In his Nov. 6 poll announcement, Musk wrote: “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10 percent of my Tesla stock.”
About 58 percent of 3.5 million votes were cast in favor of a sale.
Musk, 50, is the world’s richest person with an almost US$300 billion fortune, according to the Bloomberg Billionaires Index.
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