Elon Musk sold about $5 billion in Tesla shares this week as he exercised stock options that he received as part of his compensation package.
Musk first exercised just over 2 million stock options Monday, valued at around $2.5 billion at the day’s close, paying around $13.4 million in exercise costs, the Wall Street Journal reports.
He sold many of those shares the same day to cover tax withholding obligations, according to regulatory filings made public on Wednesday.
After selling less than 1 percent of his holdings Monday, he sold about 2 percent over the following two days.
In total, over three days, he sold around 4.5 million shares.
Musk hinted at a conference in September that he expected to exercise options in the fourth quarter, a move that would trigger what he called a huge tax liability.
He reported selling more than 900,000 shares at prices ranging from $1,135 to about $1,196 on Monday, near record highs for Tesla’s stock, whose value had increased by more than 70% this year through Friday. The difference between the value when he exercised the options and the exercise price of $6.24 will be taxable income to Musk and likely a tax deduction for the company. The lower the share price goes, if he continues to exercise options, the smaller his tax bill will be.
He would also owe taxes after selling any shares that he obtains through exercising options, based on any gain realized after exercising them. Those gains are taxed as capital gains, though any quick sales would be taxed at ordinary income-tax rates because they were held for one year or less.
