Earlier this week, Tesla confirmed having closed its recent secondary offering with $1.7 billion in net proceeds to finance its Model 3 production program, but part of the offering was also a significant set of transactions in order for Elon Musk to exercise 5,503,972 stock options and then sell 2,782,670 shares to pay taxes.

In a SEC filing issued last night, Tesla confirmed that Musk sold the shares at $213.22 for a total of just over $593 million. After the transaction, Musk’s stake in Tesla stands at 31,100,644 shares worth just over $7 billion.

When the CEO of a company sells a large amount of shares, it is generally perceived as a bad sign, but in this case, Tesla makes an effort to highlight that Musk is selling the shares “solely in order to pay income taxes related to previously reported stock option exercises” and that he is overall a net buyer in the transaction.

Tesla is referring to two different occasions in the past few months when Musk exercised over $100 million worth of stock options, but he didn’t sell any at the time to cover the taxes.

It’s not clear how much taxes Musk will have to pay exactly, but the last exercised price was $6.63 per share so he had to pay $36,491,334 to acquire the shares in the first place – leaving around $557 million. Considering he will have to pay a normal income tax rate (52% in California) on the net gain of over $200 million in the previous two transactions and over $1.1 billion in the one closed this week, but after a donation of 1.2 million shares worth over $250 million to charity, it’s not difficult to believe Tesla’s claim that all proceeds from Musk’s stock sale will go toward paying taxes.

He doesn’t accept any salary from Tesla, but he does have a lot of stock options including a generous CEO grant of 5,274,901 stock options, which are awarded in 10 tranches when the company reaches certain milestones. Yet most of his stake in Tesla was acquired through providing a significant part of the company’s working capital during the first ~7 years after its inception (2003 to 2010).

Tesla disclosed recent milestones achieved under Musk’s grant:

Successful completion of the Model 3 Alpha Prototype

Aggregate vehicle production of 100,000 vehicles

Stock options significantly increased Musk’s stake in Tesla, but they also serve another important role in the CEO’s ventures. While Musk is able to attract and retain talent at his companies in part due to their compelling missions – accelerating the advent of sustainable transport at Tesla and making humanity a multi-planetary specie at SpaceX – the use of stock options are also an important aspect.

Tesla is one of the rare, if not the only, automaker to offer equity to all its employees – from production associates to executives. It also plays an important role at SpaceX. Here’s an excerpt of an email Musk sent to all SpaceX’s employees back in 2013:

Below is my advice about regarding selling SpaceX stock or options. No complicated analysis is required, as the rules of thumb are pretty simple. If you believe that SpaceX will execute better than the average public company, then our stock price will continue to appreciate at a rate greater than that of the stock market, which would be the next highest return place to invest money over the long term. Therefore, you should sell only the amount that you need to improve your standard of living in the short to medium term. I do actually recommend selling some amount of stock, even if you are certain it will appreciate, as life is short and a bit more cash can increase fun and reduce stress at home (so long as you don’t ratchet up your ongoing personal expenditures proportionately). To maximize your post tax return, you are probably best off exercising your options to convert them to stock (if you can afford to do this) and then holding the stock for a year before selling it at our roughly biannual liquidity events. This allows you to pay the capital gains tax rate, instead of the income tax rate. On a final note, we are planning to do a liquidity event as soon as Falcon 9 qualification is complete in one to two months. I don’t know exactly what the share price will be yet, but, based on initial conversations with investors, I would estimate probably between $30 and $35. This places the value of SpaceX at $4 to $5 billion, which is about what it would be if we were public right now and, frankly, an excellent number considering that the new F9, FH and Dragon V2 have yet to launch. Elon

The email was published in Ashlee Vance’s book: Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future – which I recommend reading for a bunch of interesting tidbits like this one.

Anyway, the bottom line is that Musk is getting richer or at least his stake in Tesla is getting larger, but he is also paying a significant amount in taxes, which is somewhat satisfying to know – isn’t it?

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