Top execs have been selling their stock at historic levels, amid soaring market valuations and ahead of possible changes in U.S. and some state tax laws, the Wall Street Journal reports.
So far this year, 48 top executives have collected more than $200 million each from stock sales, nearly four times the average number of insiders from 2016 through 2020, according to a Wall Street Journal analysis of data from the research firm InsiderScore.
These include, of course, Elon Musk, who has been unloading billions of his Tesla stock at a very fast and steady pace lately.
The list of executives also includes billionaire Ronald Lauder and Google co-founders, Larry Page and Sergey Brin.
Lauder sold two million shares this year, for more than $600 million before taxes in his first sales since 2016, while Page and Brin each sold nearly 600,000 shares for about $1.5 billion before taxes, according to the WSJ.
Microsoft CEO Satya Nadella sold half his total stake, for about $374 million before taxes last month, a move that analysts believe could be related to Washington state instituting a 7% tax for long-term capital gains next year.
In addition, the Walton family, heirs to the Walmart fortune and Mark Zuckerberg, chief executive of Meta Platforms are on track to sell more shares this year than ever before.
“What you’re seeing is unprecedented,” Daniel Taylor, an accounting professor at the University of Pennsylvania’s Wharton School, told the WSJ. For him, the sales are reminiscent of the dot-com boom sell-offs. He added that this could be a normal trend and that insider stock sales tend to ebb and flow.
The WSJ notes that investors sometimes worry that large sales by insiders mean they don’t expect significant further share-price increases, and big, unexpected sales can weigh on share prices. However, experts note that the heaviest selling came on the heels of potential tax hikes as part of the Build Back Better package, reflected in the fact that in November, insiders unloaded a collective $15.59 billion, the WSJ adds.
The legislation, pending in the Senate, imposes a 5% tax on adjusted gross income above $10 million beginning in 2022, and another 3% on income over $25 million, including capital gains from stock sales, the WSJ reports. Wealthy taxpayers could save up to $8 million in taxes on every $100 million of shares sold ahead of the effective date.
Taylor told the WSJ, and such potential tax savings have been “a powerful incentive to sell this year.“