Tesla CEO Elon Musk faces more than $15 billion in taxes in the coming months on shares, likely making him sell his shares in the company this year regardless of the Twitter vote.
Musk asked his 62.7 million Twitter followers if he should sell 10% of his Tesla stock.
“A lot of unrealized gains have been made lately as a way to avoid taxes,” he said. As a result, I am proposing to sell 10% of my shares in Tesla.
The Tesla CEO has made it clear that he is committed to the results of this survey no matter what. The results were 58 percent in favor of selling and 42 percent against, indicating that he might sell stock.
Regardless of the survey results, Musk was likely to start selling millions of shares this quarter, due to looming taxes of more than $15 billion.
Elon Musk acquired the shares in 2012 as part of a compensation plan. And since he doesn’t get a salary or a cash bonus, his wealth comes from stocks and gains in the Tesla stock price.
Tesla electric cars in a showroom
In 2012, he acquired 22.8 million shares at an execution price of $6.24 per share. Tesla’s shares closed at $1,222 on Friday, which means its gain from total shares is just under $28 billion.
The company also recently revealed that Musk has taken out loans using his stock as collateral, and with the sales, Musk may want to pay off some of those loan obligations.
Tesla noted in a Securities and Exchange Commission filing for the third quarter of this year: If our common stock price drops significantly, Musk may be forced by one or more banking institutions to sell his common stock to meet his loan obligations if he cannot do so through other means. Any such sales may result in a further decline in the price of our common stock.
Shares expire in August of next year. However, Musk is required to pay income tax on the gain.
Because shares are taxed as employee benefits or compensation, they are taxed at the highest levels of ordinary income, or 37% plus 3.8% net investment tax.
Musk also has to pay the highest tax rate of 13.3% in California since he was granted and mostly earned shares when he was a California tax resident.
The combined federal and state tax rate is 54.1%. As a result, the total taxes, at the current rate, are $15 billion.
“I have a bunch of stocks that are expiring early next year,” Musk said in September. As a result, a huge batch of it sells out in the fourth quarter, because I have to or it expires.
Musk could borrow more for his Tesla shares, which now total more than $200 billion. However, he pledged 92 million shares to lenders for cash borrowing.
Musk continues to acquire shares in excess of those granted through Tesla’s 2012 wage package. In March 2018, the Tesla Board of Directors awarded him a CEO Performance Award consisting of 101.3 million shares.
Musk owns 170.49 million Tesla shares, as well as a range of stock options. Since the emergence of Tesla in 2010, Musk has sold stock only twice.
In 2016, he sold 2.7 million shares for a total of $593 million to cover taxes. In July 2010, when Tesla’s initial public offering was taking place, Musk sold just over 1.4 million shares for a total of $24 million before taxe