WSJ What’s News - Tesla Awards Elon Musk $23.7 Billion in Stock to Stay Focused

Episode Date: August 4, 2025

P.M. Edition for Aug. 4. Tesla’s board has approved an interim pay package for CEO Elon Musk to incentivize him as he is dividing his time between several companies, with plans for a longer-term pay strategy. WSJ special writer Theo Francis reports that Musk wouldn’t be the only chief executive to enter the exclusive club of gaining stock-based pay worth more than $1 billion in a single year. Plus, though President Trump only signed his tax-and-spending megabill into law last month, some companies are already starting to feel the impact by having more cash on hand. We hear from the Journal’s Heard on the Street columnist Jonathan Weil about what that means for companies, their investors and the federal deficit. And as consumer spending stagnates, Americans are on the hunt for a good deal. WSJ corporate news reporter Katherine Hamilton discusses how U.S. consumers are trying to save money, and how companies are responding. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Business is evolving fast and hearing how others are adapting can make all the difference. Hear perspectives from global executives as they share what's working, what's changing, and what they think lies ahead on the Executive Insights podcast, available on all major podcast platforms. Tesla approves a stock reward for Elon Musk as an incentive for him to remain as CEO. Plus, how big companies start benefiting from Trump's new federal tax law. And are Americans back on the hunt for a good deal? When you break out consumer sentiment, you do see that people on the lower end of the income spectrum and in the middle income are feeling a little bit worse than wealthier

folks who have more money in the stock market. It's Monday, August 4th. I'm Alex Osela for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Within the rarefied air of CEOs of big U.S. companies, there's a new, ultra-exclusive achievement, the billion-dollar year, in which the boss holds stock-based pay that grew in value by at least 10 figures in a single year. They show how today's CEO pay packages can swell far beyond their original valuations. WSJ special writer Teo Francis is here to tell us more.

Teo, I actually want to start with Elon Musk. Tesla has granted Musk a new interim stock award that is tentatively valued at more than $23 billion with the promise of more this fall. This will materialize if the company doesn't win a case before the Delaware Supreme Court. Tesla is appealing an earlier Delaware court decision and validating a 2018 pay package valued at more than $50 billion over 10 years. So, Teo, why did the board approve this new pay package? Essentially, the board of Tesla is calling this an interim pay package. What they're saying is we want to give him something, we want to reward him for the work he's done,

we want to make sure he gets paid, we want to make sure he has an incentive to stick around and stay focused on Tesla. So this is a bit of a stopgap. And there's even a clause in it that says that if he gets to keep that enormous 2018 pay package and all the stock options in it, then this one is going to go away. Zooming out a little bit, last year just two other CEOs made it to the billionaire pay club, Palantir's Alexander Karp and Broadcom's Hawk Tan. How are these other executives getting to this billion-dollar milestone?

So now we have to jump into the weeds just a bit. Most of the time when we talk about executive pay, we're talking about the grant date fair value. That just means what is it worth when they get it? With cash, that's easy. Cash is cash, it's worth what it is, the end. Equity is more complicated because a lot of the equity that executives get has strings attached to it.

So it might be restricted stock that you only get after so many years. That's what this newest interim award is for Elon Musk. It's a two-year vesting period. It means he doesn't actually get the shares themselves for two years. After that, you have stock options, you have a lot of different complicated mechanisms that can make it easier or harder for the executive to get more or less shares. The upshot is that you have to put a value on it, and they do that as of the date the equity is awarded.

So what happens after that? Well, in the last few years, companies have had to disclose that. And for a few CEOs, a very small number, those changes over time in any given year have gone to 10 figures. And that's what these new disclosures give you a window into. And it seems like these companies are incentivizing their executives to stay, to be engaged, to work harder for the company so that their share is best, so that they get essentially a greater payout in the end? That's the idea.

Companies always describe this as either attracting or attracting and retaining, or just keeping the CEO that they have. Critics of this kind of pay question whether that really makes that much difference after the first billion, how much of a difference does it make, and also question whether these kinds of incentives don't backfire sometimes. After all, if it looks like the CEO isn't going to get it, if it's not going to grow to these huge proportions, do they maybe look elsewhere? It's part of the raging debate about how to structure CEO pay and how much is too much.

That was WSJ special writer, Teo Francis. Thanks so much, Teo. Thank you. U.S. factory orders have declined for two of the past three months. The Commerce Department said today that orders from U.S. factories fell 4.8 percent in June from the previous month. Economists surveyed by The Wall Street Journal were expecting a 4.9% decline. Stocks rose today, bouncing back from last week's downturn.

The Nasdaq notched a nearly 2% gain, while the S&P 500 and the Dow each climbed about 1.5% and 1.3% respectively. INTRO Eric Trump and Donald Trump Jr. are helping to launch a SPAC targeting American manufacturers, adding to the array of companies the president's sons are involved in beyond their family's real estate empire. Today, New America Acquisition One Corp filed paperwork for what it hopes will be a $300 million public offering on the New York Stock Exchange. SPACs are blank-check firms that look for a private company to merge with and then take public, avoiding some red tape. New America says it will aim to merge with businesses focused on revitalizing U.S. manufacturing

and supply chains. The First Family's fast-widening empire has drawn scrutiny from those who say that Trump's investments pose conflicts of interest. Coming up, how President Trump's tax mega-bill is already putting cash into companies' coffers. That's after the break. Active Fixed Income ETFs from Hartford Funds. Built to help you navigate complex bond markets with the affordability of an ETF. Actively managing your fixed income is actively managing your client's future. Learn more at HartfordFunds.com slash active. Investing involves risk. Carefully consider funds investment objectives, risks,

charges and expenses before investing. Visit HartfordFunds.com to obtain a prospectus containing this and other information. Read it carefully before investing. Alps distributors. Just a month ago, President Trump signed his big, beautiful tax and spending bill into law. Now some of America's biggest companies are already starting to feel the benefits as cash savings are starting to show up. Heard on the street columnist Jonathan Weil joins

me now. Jonathan, how exactly is this money showing up? Well, it's showing up in the form of cash that companies will keep that previously they wouldn't have had to keep when they had different tax laws. Specifically, if a company is accelerating depreciation for tax purposes, for some capital expenditure it goes and builds a factory, or if it has research and development expenses. If it's writing off all of those expenses immediately for tax purposes, that means that in year one, its tax bill will be lower because its taxable income will be lower, and that is cash that the companies get to keep that they otherwise wouldn't have. And how much are we actually talking about here?

Well, a person we spoke to, David Zion, who's a longtime tax and accounting analyst, they did a sample of 369 of the S&P 500 companies. And for those companies, in a one-year period, it adds up, by their estimates, to $148 billion. That's just rough back-of-the-envelope calculations, but these are going to be some serious numbers. Some have criticized the legislation because it might inflate the federal deficit. Would that be a concern for businesses and investors? Whatever one's views are about ballooning budget deficits or corporate tax breaks, from an investor's standpoint,

they have helped bolster stock valuations and probably will. From an investor's standpoint, more money in companies' pockets and less money in the government's pockets, broadly speaking, that is good for investors. Investors aren't the only people who vote, of course, and there are a lot of other folks who may have a different view that we shouldn't be having such large corporate tax breaks, especially when we're talking about cutbacks to other government services, whether that's health care for the poor and the disabled, or whatever your favorite government program is.

That was WSJ Heart on the Street columnist Jonathan Weil. Thanks so much, Jonathan. Thank you for having me. After spending lavishly through the post-pandemic years on everything from home improvement to travel, U., US consumers find themselves in a summer of economic uncertainty. Everything from beef to coffee to cars is costing more. And CEOs are noticing that consumers seem to feel strapped.

For more, I'm joined now by corporate news reporter, Catherine Hamilton. Catherine, we've seen from federal data that consumer spending has stagnated in the first half of the year. How is that playing out on the corporate side? What kinds of changes are they seeing? So a lot of executives have talked about seeing a lot of different behavior shifting.

The primary thing that they're seeing is consumers just pulling back on a lot of areas. Some consumers are trading down, looking for cheaper options. Some consumers are doing more couponing, looking for more promotions, buying more generic brands, putting off big purchases and bigger trips as well. And is this all consumers or just certain income levels? It seems to be happening pretty much across the board based on what executives have talked about seeing. For example, at Olive Garden, a more inexpensive option for dining out, they're seeing more families who make $150,000 or more coming in. And those people on the lowest end of the spectrum making

$50,000 or less are visiting less frequently. When you break out consumer sentiment, you do see that people on the lower end of the income spectrum and in the middle income are feeling a little bit worse than wealthier folks who have more money in the stock market. How are companies adapting to thriftier consumers across the board? A lot of them at this point, I would say, are waiting and seeing. Some of them have talked about doing more promotions and some have also talked about leaning into their generic brand since again there's more demand for that.

That was WSJ Reporter Catherine Hamilton. Thanks so much Catherine. Thanks. And finally, Taiwanese contract manufacturer Foxconn plans to work with partners to convert a former electric truck factory in Lordstown, Ohio into a plant making cloud computing hardware for artificial intelligence applications. That's according to people familiar with the plans. It's a symbolic move for the American company under President Trump, who signed a budget bill that ended subsidies for electric vehicles

but has promoted U.S. manufacturing of AI equipment, such as computers and chips, as well as the construction of data centers to perform AI tasks. And that's what's news for this Monday afternoon. Today's show is produced by Pierre Bienamé with supervising producer Michael Cosmides. I'm Alex Osala for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. obesity, diabetes, high blood pressure, joint pain, or support for GLP-1 therapies, OMADA makes chronic care easier. And we do it with a human-led, tech-enabled approach that truly helps people live healthier and feel better. It's no wonder OMADA has a 90% customer retention rate.

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