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Tesla Insider Stock Sales Are on Pace to Eclipse a 2013 Peak

Anders Melin and Brandon Kochkodin
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Tesla Insider Stock Sales Are on Pace to Eclipse a 2013 Peak

(Bloomberg) -- Tesla Inc. senior managers and directors -- excluding Chief Executive Officer Elon Musk -- are on pace to collect the most money from selling the automaker’s stock in at least six years.

Five insiders netted $52.2 million so far this year from share sales, after subtracting the cost of exercising stock options, according to data from InsiderInsights.com, which analyzes such transactions. If that continues at the same rate, and assuming Tesla’s beaten-down shares don’t fall further, the annual total could eclipse the 2013 peak of $111.2 million.

All of the sales in 2019 were made through pre-arranged trading plans, and many insiders are hanging on to their stock. The five sellers represent about a third of Tesla executives and directors who are required to report equity transactions to regulators.

Tesla shares have plunged almost 50% from their intraday peak last August, when Musk infamously tweeted that he had secured funding to take the automaker private at $420 a share. The company has struggled to produce its Model 3 sedan, and Wall Street has grown increasingly skeptical about consumer demand for the critical product. On Tuesday, Morgan Stanley analysts led by Adam Jonas, a one-time bull, slashed their worst-case scenario for how much the shares may be worth in a year to just $10. The stock dropped 4.9% to $195.09 at 2:06 p.m. in New York.

Former lead independent director Antonio Gracias, who isn’t planning to stand for re-election when his term ends next year, is leading the pack with sales of $18.7 million. Board members Brad Buss and Linda Johnson Rice, who are stepping down next month, disposed of shares worth $18 million and $4,100, respectively. The options exercised by Gracias and Buss were set to expire in June.

Board members receive most of their compensation in stock options, said Tesla spokesman Kamran Mumtaz. Recipients of options reap value from the securities only if the stock price increases.

Only two senior managers required to report stock transactions -- Chief Technology Officer Jeffrey Straubel and Jerome Guillen, president of automotive operations -- have sold shares, netting $15 million and $500,000, respectively. The options they exercised weren’t set to expire for at least two years.

The stock sales exclude one by Musk in 2016. That year, he exercised 6.71 million options that were set to expire, and sold 2.78 million shares to pay $593 million of income tax tied to the transaction, regulatory filings show.

Aside from that sale, he has spent $295 million to purchase company stock over the years, including $25 million on May 2 as part of a secondary offering.

(Updates with share decline in fourth paragraph. An earlier version of this story corrected Gracias’s title.)

--With assistance from Dana Hull.

To contact the reporters on this story: Anders Melin in New York at amelin3@bloomberg.net;Brandon Kochkodin in New York at bkochkodin@bloomberg.net

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Peter Eichenbaum

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