Interesting excerpt from that NYT article - "The terms of the settlement are slightly tougher than those that two people briefed on the talks said Mr. Musk had rejected on Thursday, which called for a two-year bar on serving as chairman and a $10 million fine."

It got harsher just after one day

I dont see how that's covering if he's still getting $20m of tesla stock

I don't know the terms. I'm assuming that this is a new issuance at the current market price and thus would effectively provide $20 million of additional liquidity to counteract the cost of the settlement.

The details will surely be disclosed.

But the company could get approxately the same amount of cash by selling the new issuance on a public exchange.

Maybe not, if the stock is already dropping. This affirms the current price to some extent.

Assuming he is buying newly-issued shares from Tesla, then the money goes directly into their treasury. So, the company will have $20MM more in cash than it did the day before.

He is still getting something out of that transaction. That's like saying buying food at a restaurant is a donation.

I'm no finance person, lawyer, or anything like that. But I suspect that he can't just give Tesla money and it has to be in exchange for something, such as stock.

It will cost the company 20 million yes but will not affect the free cash flows

If it's newly issued the price will be dilution of the other shareholders stock. I guess it's a smallest burden on Elon and the rest of the shareholders.

And all existing shareholders will be diluted by the issuance of those shares.

The shares would lose value via dilution or via a new $20 million debt, this is just an easy way to get the cash on hand.

I meant "covering" in the context of the parent commenter's concern about cash flow. He's not donating the money to Tesla, but he's preventing the fine from making their cash flow worse.

Buying stock on the public market doesn't affect Tesla or its cash flow at all. Tesla is not the counterparty in this transaction.

That wouldn't make sense. Do you have a source?

He's not covering anything, and unless he buys it at the price it was right before he tweeted it's arguably another instance of securities fraud.

For those wondering why, look at the comments elsewhere in this discussion about how the $20mm owed by Tesla will cause them to run out of cash sooner.

I don’t think “covering” is the word you’re looking for here...

Ah yes, just keeping leveraging against debt!