Satya Nadella Sold 285 Million In Microsoft Stock

last updated on

Satya Nadella Sold 285 Million In Microsoft Stock

Satya Nadella Sold $285 Million In Microsoft Stock.

Microsoft (MSFT -0.14%) CEO Satya Nadella sold a staggering $285 million worth of Microsoft stock during the course of November 22 and 23, according to a recent regulatory filing made on Nov. 24. The sum was almost equal to his Microsoft holdings. Microsoft's spokeswoman just noted that the transactions were made for 'personal financial planning purposes and diversification reasons' in regards to the transaction.

The fact that Nadella has earned roughly $30 million in stock each of the previous three years, in addition to a salary and cash incentives totaling in the mid-teens of millions of dollars, indicates that he is undoubtedly a significant shareholder. Even for Nadella, $50 million was a significant disposal at the time. About 30% of Nadella's entire shares at the time were sold in 2018.

But despite Microsoft's soaring stock price, there is another reason for this year's higher-than-average stock sales. See, the state of Washington just approved a high 7% capital gains tax at the state level on stock sales that earn profits exceeding $250,000, and Microsoft's headquarters are located in Redmond, Washington. The new tax was only recently enacted this year, and it won't go into force until January 1, 2022.

It's understandable that Nadella picked this time to sell some Microsoft stock given the company's strong profits this year and the $20 million or so in additional taxes he would have to pay on the $285 million if he sold in 2022 or later.

Certain times, significant executive stock sales may portend unpleasant things to come. However, it typically happens in underperforming businesses when issues abound and bankruptcy may be an option. Microsoft is anything but that; it has a number of well-established brands, a thriving cloud industry, and a sizable cash reserve on its financial sheet.

A 37 price-to-earnings (P/E) ratio isn't exactly inexpensive, to be sure.

Trending Stories