Microsoft CEO Satya Nadella offloads stocks ahead of costly new taxes

Kareem Anderson

Microsoft CEO Satya Nadella may have narrowly escaped the “tax the rich” mob with a clever series of stock divestments just ahead of the Thanksgiving weekend in the US.

According to regulatory filings, Nadella sold 840,000 shares between November 22 and November 23 for a sum total of $285 million, which is coincidentally right before a controversial new Washington State led capital gains tax goes into effect.

The capital gains tax was approved earlier this year by Washington Governor Jay Inslee, and becomes effective January 1, 2022 The new tax will apply to individual owners of pass-through entities and disregarded entities.

More specifically, the 7% gains tax will be on “recognized taxable gains from voluntarily selling or exchanging long-term capital assets, including amounts of stock received as part of an employee compensation plan. The tax applies to natural persons and to individuals who are beneficial owners of long-term capital assets held by a pass-through or other disregarded entity. This means that capital gains realized by pass-through entities and disregarded entities need to be reported by the owners of such entities as subject to the tax. The result is that Washington will tax long-term capital gains reported on an individual’s federal income tax return, subject to certain carve-outs and deductions.”

The link between Nadella’s sell-off and the effective date of Washington states new gains tax is tangential at the moment and neither Microsoft nor Nadella have comments hinting otherwise.

When asked about the sell-off, Microsoft Board of Directors backed Nadella’s play while remaining vague of their own personal judgement of the move.

He is committed to the continued success of the company and his holdings significantly exceed the holding requirements set by the Microsoft Board of Directors.

The profits from the new gains tax are designed to funnel money towards early education and childcare to the tune of $550 million eventually.

With 840,000 new stocks in circulation, Microsoft’s own stock price saw bump of 2% on Monday which comes ahead of the company’s annual shareholders meeting next Tuesday.