Despite the massive stock sales executed by the world's richest man, Elon Musk, last year, totaling approximately $22 billion through stock sales, exercising some options, and charitable donations, his stake in the electric vehicle company he founded increased thanks to his special bonus package. Musk sold $16 billion worth of shares last year, and according to a document from the U.S. Securities and Exchange Commission released on Monday, he donated 5 million shares valued at around $6 billion to a charity in November, as reported by CNBC, which was reviewed by Al Arabiya.net.
However, due to the nature of exercising options, Musk ended the year with a larger ownership stake—and more shares—of Tesla. In 2021, Musk obtained 22.8 million shares worth $28 billion in the fall when he began selling. The way exercising options works is that Musk first began converting 22.8 million options into shares. Musk had the options to purchase Tesla shares at a price of $6.24 per share, while it was trading for over $1,000 in the fall.
With each conversion of options, he would simultaneously sell shares to pay taxes, as options are taxed as income. Even while offloading billions of dollars worth of shares to meet tax obligations, he was accumulating a greater number of shares at the low option price, thus increasing his ownership in the company.
In total, Musk sold 15.7 million shares for $16.4 billion. When adding the granted shares, his total sales reached 20.7 million shares. Nevertheless, he acquired 22.8 million shares through exercising options, leaving him with an additional 2 million shares in Tesla by the end of the year, as he currently owns 172.6 million shares, representing a 17% stake in the company, making him the largest individual shareholder.
Musk began his sales by asking his Twitter followers in a poll whether he should sell 10% of his stake in Tesla, which ended with 58% in favor of the sale and 42% against it. Ultimately, he fulfilled his promise to sell 10% of his ownership. However, he regained more options, giving him a back-and-forth journey with the shares that left him with billions in cash, the largest tax bill in U.S. history, and more Tesla shares.
Musk's ownership—worth $227 billion—is likely to increase again in the future. His next expected bonuses in 2028 are likely to be greater than those he received in 2012, which he exercised last year.
