Photograph of Jasper Junen / Bloomberg
Directors, Brad Buss and Antonio J. Gracias, have sold considerably more Tesla shares this year than in 2018, accounting for 73% of the company 's insider sales. The transactions were part of the business plans established last year.
The wheels left the Tesla stock (symbol: TSLA) in 2019. Stocks have fallen 35% since the beginning of the year, with shares closing Friday at $ 214.92. The stock was under pressure due to fears of declining demand, regulatory oversight and reports of "radical" cost reductions. Another problem in recent years is the board of directors, Elon Musk, who acted as a cheerleader and an echo chamber.
Tesla did not make Buss and Gracias available to comment on the increase in their share sales. Buss could not be joined independently, while Gracias did not respond to a request for comment. The company declined to comment on the transactions and issues that weighed on the stock.
Buss' recent sales took place in the months leading up to his resignation from the board last week. Gracias plans to leave the board at the end of his term in 2021.
So far this year, Buss has sold 77,082 Tesla shares for a total of $ 20.3 million, at an average price of $ 263.29. Gracias sold 100,886 Tesla shares for a total of $ 26.5 million, at an average price per share of $ 262.55. Total sales of Tesla insiders this year totaled $ 67.9 million, for an average price per share of $ 277.83.
Last year, Gracias sold 16,780 Tesla shares for $ 5.3 million, at an average price of $ 318.62. Total sales of Tesla insiders in 2018 was $ 15.1 million, an average price per share of $ 203.92. Prior to 2019, Buss had sold Tesla shares for the last time in 2016.
Both Buss and Gracias have established trading plans called Rule 10b5-1 in November 2018. Plans automatically execute transactions when predefined conditions are met, such as a trading price or volume reaching certain levels. These conditions are not publicly disclosed. The plans aim to eliminate any perception that an insider could have benefited from the knowledge of non-public information.
All of the put options were due to expire this week. The options were exercisable since June 2015.
In April, Tesla announced that four directors would leave the company's board at the end of their term. For Buss, the former chief financial officer of SolarCity – a company bought by Tesla in 2016 – and Linda Johnson Rice, president and chief executive officer of Johnson Publishing Company, that meant last Tuesday.
Gracias, CEO of private equity firm Valor Management, is also reported to have left next year, but shareholders have rejected a move to shorten the term of the board from two to three years. He will leave office when his term ends in 2021. Gracias was one of the first investors in Tesla.
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Buss and Gracias still held a substantial amount of unexercised options at the automaker at last week's shareholders meeting. According to Tesla's last proxy, Buss held options for 204,082 shares by the end of 2018, while Gracias owned 288,600 shares. So far this year, Buss has used options to acquire 77,082 shares, and Gracias used them to buy 86,600 shares.
Gracias, whose last sale took place on June 3, now holds 271,778 Tesla shares through a limited liability company, according to a form he has filed with the Securities and Exchange Commission. He also owns 466 shares in a personal account and 4,253 shares through his company, Valor.
In the future, Buss will not be required to disclose transactions on Tesla shares since it is no longer an insider of the company. His last announced share sale was May 16, leaving him 1,540 Tesla shares in a personal account and 11,808 shares held through a trust.
Write to Ed Lin to firstname.lastname@example.org and follow @BarronsEdLin.