Elon Musk tapped more of his shares in Tesla Inc. late last year to unlock some of his wealth and also entered into an unusual arrangement to provide liability coverage for fellow members of the electric-car maker’s board.
Musk increased the share of his Tesla holding that he’s pledged as collateral for personal loans to 54 percent at the end of 2019, the company disclosed in a regulatory filing Tuesday. That compares with 40 percent at the end of 2018, when the carmaker last shared the size of Musk’s pledging.
Tesla said in the filing that the company decided not to renew its directors’ and officers’ liability policy for 2019-2020 due to “disproportionately high” premiums quoted by insurers. Musk, 48, instead agreed to personally provide substantially equivalent coverage for a year. The carmaker’s board concluded the arrangement with the CEO would not impair the independent judgment of his fellow directors.
The amended annual report from Tesla shows Musk had pledged 18.5 million shares as of Dec. 31, an increase of about 5 million shares compared with a year earlier. His overall stake in Tesla had a value of about $27 billion at Monday’s close, and the market value of his pledged shares would be roughly $15 billion assuming the position hasn’t changed this year.
While it’s not uncommon for the ultra wealthy to borrow against their stock, the amount pledged by Musk trails only Larry Ellison’s $16 billion pledge of Oracle Corp. shares on the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people. Ellison, 75, is a friend of Musk’s and joined Tesla’s board in late 2018.
Tesla’s press office didn’t respond to a request for comment.