Tesla stock was down by as much as 11% in mid-day trading on Tuesday, extending losses for a second day, after CEO Elon Musk over the weekend proposed selling 10% of his shares in the electric vehicle business.
The drop is on pace to be the largest of the year for the stock, and comes after a fall of nearly 5% on Monday, tempering a mostly upward trend for the year. Overall, Tesla shares are up more than 47% in 2021 and have more than doubled from one year ago, as the company reported improved automotive margins and navigated a chip shortage to ramp production while competitors faltered.
Current and former board members including chairwoman Robyn Denholm, Elon Musk’s brother Kimbal Musk, Ira Ehrenpreis and Antonio Gracias have also offloaded hundreds of millions of dollars worth of Tesla shares since Oct. 28 after Tesla’s market cap surpassed $1 trillion.
Musk was awarded a hefty options package as part of a CEO performance plan in 2012. Because he doesn’t take a salary or cash bonus, his wealth comes from those stock awards and gains in Tesla’s share price. The 2012 award was for 22.8 million shares at a strike price of $6.24 per share. Those are due to expire on Aug. 13, 2022.
He has additional options from an unprecedented 2018 CEO pay package as well.
The iconoclastic CEO has pledged at least 92 million of his Tesla shares to lenders for cash borrowing. As CNBC previously reported, Musk may want to sell some shares to pay down his debt, and he faces a potential $15 billion tax bill on his windfall as he exercises his options and sells shares.
This story is developing. Please check back for updates.
–Yun Li contributed to this story