No cash changed hands, and no shares were sold into the open market in the process, a filing shows.
- The options exercised in this deal were part of the landmark compensation package that Tesla shareholders approved for Musk in 2018.
- The shares Musk received remain restricted.
- They will not fully vest until Jan. 19, 2028, and only if he continues serving as CEO.
Shares of Tesla Inc (TSLA) edged up after hours on Wednesday after CEO Elon Musk exercised his 2018 performance-based stock option award and boosted his direct ownership in the company.
According to a filing submitted to the U.S. Securities and Exchange Commission on Wednesday, Musk converted those long-held options into actual shares through a straightforward process in which Tesla withheld some of the new shares to cover the exercise cost. No cash changed hands, and no shares were sold into the open market.
Musk received about 304 million shares by exercising options that allowed him to buy them at $23.34 each, for a total cost of around $7.1 billion. Tesla then took back 17.5 million of those shares, valued at the current market price of about $405, to settle the bill. Musk walked away with a net gain of nearly 286 million additional shares.
According to a separate filing, Musk currently owns 19.9% of Tesla.
Musk’s Contentious 2018 Pay Package
The options exercised in this deal were part of the landmark compensation package that Tesla shareholders approved for Musk in 2018. Unlike typical executive pay, that package included no salary and no cash bonuses. It was built entirely around performance. Musk was given the right to buy a very large number of shares at a low fixed price, but the options would only become available in stages if Tesla hit a series of aggressive targets for revenue, profits, and overall company value. The milestones were eventually reached, which is why the options could finally be exercised this year. The package has been one of the largest and most debated CEO compensation plans in modern corporate history, drawing years of legal challenges and shareholder votes before it could move forward.
The shares Musk received remain restricted. They will not fully vest until Jan. 19, 2028, and only if he continues serving as CEO or in a comparable leadership role.
How Did TSLA Retail Traders React?
On Stocktwits, retail sentiment around TSLA stayed within the ‘neutral’ territory over the past 24 hours, while message volume stayed at ‘normal’ levels.
TSLA stock has fallen 10% this year.
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