Elon Musk's Ability To Borrow On Pledged Tesla Shares Reduced, Co-Founder Straubel Nominated To Board: What Proxy Filings Reveal

A proxy filing by Tesla Inc. TSLA late Thursday showed the company is bringing back co-founder and former executive JB Straubel as a board member.

The company also disclosed changes to its stock pledging policy.

Return Of Straubel: Straubel, who founded battery material recycling company Redwood Materials after quitting Tesla, would be nominated in place of Hiromichi Mizuno as a Class I director. Mizuno will not stand for reelection once his term expires this year, the company said.

Elon Musk, Straubel and board chair Robyn Denholm were nominated for election as Class I directors.

Pledging Policy: Tesla said it is amending its pledging policy, making two changes. The company capped the aggregate loan or investment amount that can be collateralized by the pledged stock of Musk to the lesser of $3.5 billion or 25% of the total value of the pledged stock.

The $3.5 billion upper ceiling was newly introduced, while the 25% criterion was maintained unchanged. This suggests Musk cannot borrow more than $3.5 billion by pledging the Tesla stock he owns.

See Also: Everything You Need To Know About Tesla Stock

The company also opted to lower the percentage used to calculate the maximum loan or investment amount borrowable by directors and officers, based on the total value of their pledged stock, from 25% to 15%.

Tesla reasoned that this was done to mitigate the risk of forced sales of pledged shares.

The proxy filing also showed Musk owned 411.06 million shares, held by the Elon Musk Revocable Trust, on his behalf, while 303.96 million shares are issuable to him upon exercise of options exercisable within 60 days after March 31, 2023. Out of these, Musk has pledged about 238.44 million shares as collateral for personal indebtedness.

At Thursday’s closing price of $185.06, the pledged shares would be worth about $44 billion, which previously could have secured him a loan amount of about $11 billion.

Tesla closed Thursday’s session at $185.06, down 0.25%, according to Benzinga Pro data. (The markets are closed today, Good Friday.)

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