Elon Musk has fully exercised his 2018 CEO compensation plan at Tesla, obtaining a total of 303,960,630 shares with a paper gain of up to $116 billion (about 786.986 billion yuan at current exchange rates), according to a latest filing with the U.S. Securities and Exchange Commission (SEC).
Tesla filed Form 4 and an amendment to Schedule 13G with the SEC on June 17, both recording a transaction completed on June 16, 2026. Musk exercised 303,960,630 stock options at a split-adjusted exercise price of $23.34. Tesla's closing price that day was $404.66, resulting in a spread (difference between exercise cost and market price) of $381.32 per share.
The single transaction's paper gain of approximately $116 billion marks the finalization of the 2018 equity incentive plan and is one of the largest equity grants in corporate history.
The original 2018 grant was for 20,264,042 shares with an exercise price of $350.02. After Tesla's 1-for-5 stock split in 2020 and 1-for-3 split in 2022, the plan was adjusted to 303,960,630 shares with an exercise price of $23.34.
The filing explicitly states that there was "no sale of securities in the public market" in this transaction.
Exercising 304 million options at $23.34 would cost approximately $7.1 billion. Musk did not pay cash but used a net settlement method: Tesla directly withheld 17,531,857 shares to cover the exercise cost, valued at about $7.1 billion based on the $404.66 closing price.
After deducting the withheld shares, Musk actually added 286,428,773 net new shares. However, these shares are subject to restrictions: they are tied to continued employment and will not officially vest until January 19, 2028, and cannot be sold during this period.
Form 4 shows Musk directly beneficially owns 710,172,677 shares and indirectly holds 413,152,109 shares through the Elon Musk Irrevocable Trust.
However, the Schedule 13G filed the same day shows a different figure: total holdings of 699,580,882 shares, representing 19.9% of Tesla's total outstanding shares.
The discrepancy arises from the 2025 CEO performance incentive plan. Form 4's total includes 423,743,904 shares from that larger, separate plan, while Schedule 13G does not include these shares. Musk disclaims beneficial ownership of those shares because they are subject to a voting agreement, with irrevocable voting proxy given to Tesla's corporate secretary to vote in line with other shareholders. Additionally, Schedule 13G excludes 96 million shares of interim incentive shares that were canceled on April 21.
This exercise finally concludes a six-year legal battle. In 2024, Chancellor Kathaleen McCormick of the Delaware Court of Chancery ruled to rescind the 2018 equity incentive plan, finding that Tesla's board had a conflict of interest and misled shareholders. In December 2025, the Delaware Supreme Court overturned that ruling, determining that full rescission was too harsh a penalty.
On April 21, 2026, Tesla's board signed an Execution Agreement, and a few days later filed documents to proceed with share issuance. Musk submitted an exercise notice on June 9, opening a five-business-day exercise window that ended on June 16.
This 2018 equity plan is entirely independent of the trillion-dollar CEO compensation plan approved by shareholders in November 2025; the latter will vest in multiple tranches, with the last unlocking by 2035, and some shares will vest early if SpaceX and Tesla merge.
These options are non-qualified stock options, and the $116 billion paper spread will be taxed as ordinary income, not at capital gains rates.
At the top U.S. federal rate of 37% plus Medicare surtax, the federal tax alone would be about $45 billion. Musk resides in Texas, so he pays no state income tax, saving about $15 billion compared to living in California.
However, since Musk still frequently travels to California for work, California may attempt to collect some taxes.
The timing of tax payment remains uncertain: these shares are restricted until 2028, and unless Musk actively elects to pay taxes now, the obligation can be deferred until the shares vest. In 2021, when he exercised options from the 2012 incentive plan, he paid over $11 billion in taxes; the tax bill for this exercise will be much larger.
