One of the best-kept secrets of America’s billionaires is the size of their tax bills.
Tesla Inc. has provided a rare glimpse into this world, disclosing Thursday that its billionaire Chief Executive Officer Elon Musk paid at least $593 million in income taxes last year. He got hit with the big tax bill after exercising stock options that were set to expire at the end of 2016, a filing shows.
He paid the taxes by selling some of the shares he got from the options, keeping the remaining ones. Don’t weep for Musk. He’s got a net worth of about $12.9 billion, the bulk of it tied up in the carmaker’s stock, according to the Bloomberg Billionaires Index.
While the tax payment seems like a staggering sum, it’s hard to know exactly how it compares to what other billionaires shell out. It’s exceedingly unusual for that to be disclosed. And it’s equally unusual for companies to disclose the tax bill of one of its top executives. In this case, Tesla wanted to show investors that Musk sold the shares to cover taxes on the options he exercised months before they would have otherwise expired.
When an option is exercised, the holder must pay income taxes on the gain between the strike price and the price on the exercise date. Musk’s gain on the options was $1.34 billion, according to the filing.
Musk received the options in 2009 as compensation meant to cover him for several years. Some were linked to Tesla developing the Model S sedan and producing at least 10,000 vehicles. He received another grant in 2012, worth about $1.4 billion as of Thursday’s close.