Text size

Two Tesla directors, Brad Buss and Antonio J. Gracias, have sold significantly more Tesla stock this year than in 2018, accounting for 73% of the insider selling at the company. The transactions were part of trading plans established last year.

The wheels have come off Tesla stock (ticker: TSLA) in 2019. Shares are down 35% so far this year, with shares closing Friday at $214.92. The stock has been pressured by worries of lower demand, regulatory scrutiny, and reports of “hard-core” cost-cutting. Another issue in recent years has been allegations that its board was “acting like a cheerleader and an echo chamber” to CEO Elon Musk.

Tesla didn’t make Buss and Gracias available for comment about their increased stock selling. Buss couldn’t be reached independently, while Gracias didn’t respond to a request for comment. The company declined to comment on the transactions and the issues that have weighed on the stock.

Buss’ recent sales came in the months before he stepped down from the board this past week. Gracias plans to leave the board when his term ends in 2021.

So far this year, Buss has sold 77,082 Tesla shares for a total of $20.3 million, at an average price of $263.29. Gracias has sold 100,886 Tesla shares for a total of $26.5 million, at an average per-share price of $262.55. Total sales by Tesla insiders this year have totaled $67.9 million, an average per-share price of $277.83.

Last year, Gracias sold 16,780 Tesla shares for $5.3 million, at an average price of $318.62. Overall Tesla insider sales in 2018 came to $15.1 million, at an average per-share price of $203.92. Before 2019, Buss had last sold Tesla stock in 2016.

Both Buss and Gracias established so-called Rule 10b5-1 trading plans in November 2018. The plans automatically execute transactions when preset conditions are met, such as a stock price or trading volume reaching certain levels. Those conditions aren’t publicly disclosed. The plans are meant to eliminate any perception that an insider may have benefited from knowledge of nonpublic information.

All of the sales incorporated options that were set to expire this week. The options had been exercisable since June 2015.

In April, Tesla said four directors would leave the company’s board at the end of their terms. For Buss, the former finance chief of SolarCity—a company that Tesla acquired in 2016—and Linda Johnson Rice, chair and CEO of Johnson Publishing Company, that meant this past Tuesday.

Gracias, CEO of private-equity firm Valor Management, would have left next year, too, but shareholders rejected a measure to shorten board terms to two years from three. He will now leave when his term ends in 2021. Gracias was an early investor in Tesla.

Read More: Tesla Investors Shouldn’t Forget the Value of Its Technology

Editor's Choice

Buss and Gracias still owned a substantial amount of unexercised options in the car maker through this past week’s shareholder meeting. According to Tesla’s latest proxy, Buss owned options for 204,082 shares at the end of 2018, while Gracias owned options for 288,600 shares. So far this year, Buss used options to acquire 77,082 shares, and Gracias used them to buy 86,600 shares.

Gracias, whose most recent sale was June 3, now owns 271,778 Tesla shares through a limited liability company, according to a form he filed with the Securities and Exchange Commission. He also owns 466 shares in a personal account, and 4,253 shares through his firm, Valor.

Going forward, Buss won’t be required to disclose Tesla stock transactions since he’s no longer a company insider. His last reported stock sale was May 16, leaving him with 1,540 Tesla shares in a personal account, and 11,808 shares owned through a trust.

Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.