Elon Musk has exercised its purchase right this week at 5.5 euros on more than two million shares of Tesla which he secured with options acquired in 2012, and has sold just under a million around 881 euros to pay the tax surcharge for the operation.
The CEO of the electric vehicle manufacturer and the world’s richest person, according to the Bloomberg index, informed the regulator of the US markets, the SEC, from a change in the number of titles you own that revealed these movements.
TESLA MOTORS (TSLA)TESLA MOTORS (TSLA)
Musk launched on November 6 an ordeal in Twitter asking his 63.2 million followers if he should sell 10 percent of his shares in Tesla, a movement that led the company to have falls of 9 percent in the reopening of the stock market after the tweet, and 12 percent the next day.
That is, with a survey Musk plummeted the share price from $ 1,222 (€ 1,077) to $ 1,023 in a matter of two days.
The shares have been relatively flat for the rest of the week, making a rally to $ 1,050 in the session on Tuesday, November 16.
But after the information published by the founder of Tesla Before the American institution, the question arises: Was it interesting to Musk lower the price of your asset?
Elon Musk’s battle with taxes
The report published in the SEC offers different details. On the one hand, it points out that the transactions carried out were made automatically, following a plan pre-established by the CEO in September, a roadmap that he already warned about in a conference organized by Recode.
On the other hand, it also informs that the sale was made “solely to satisfy the reporting person’s tax obligations, related to his right to use options to buy 2,107,672 shares.”
Musk acquired in 2012 the right to buy more than 5 million shares of his company through options, thanks to a compensation plan that would be activated after the fulfillment of certain objectives widely exceeded by the electric car manufacturer.
The options granted by the board of Tesla to the manager were 10 years, so they expire in August 2022, and Musk seems to have a plan in place to collect them before they expire.
As he himself recalled again on social networks, however, Musk “You do not receive a salary or bonus” from your company. It only has shares, so the sole personal tax obligation of the businessman comes when he operates with them.
Despite the notable difference between Musk’s purchase price at 5.5 euros and the current value of the shares has left a succulent return in their coffers, the loot will be much less due to the taxes applied in the transaction.
This occurs because the tax in question can be up to 50 percent of the benefit, adding the US federal taxes and those of the state of residence of Musk at the time of receipt of the options, California.
That is, if you have earned around 20,000 million euros in the operation, 10,000 will go to the public coffers.
The idea does not seem to amuse the visionary businessman, famous in the networks for his mockery of communism or state intervention, and who has recently also attacked the American Democrat Bernie Sanders, after he demanded that “those who are extremely rich pay their share.”
A decline in the share price of Tesla at the exact moment in which you thought to exercise your right on some options, therefore, it implies a lower profit, but also a lower payment of taxes, something that Elon Musk seems to do very unhappy.