Momentus' Use of Equity Incentives: Strategic Talent Attraction or Shareholder Risk?

In the high-stakes arena of commercial space exploration, talent is the new rocket fuel. Momentus Inc. (MNTS), a key player in the orbital transportation sector, has leaned heavily on equity incentives to attract and retain top-tier engineers and executives. But as the company ramps up its inducement awards, investors must ask: Are these stock-based deals a smart bet for long-term growth, or do they risk diluting shareholder value in a volatile market?

Strategic Talent Attraction: A Necessary Burn for Growth

Momentus operates in a sector where competition for skilled labor is fierce. According to a report by NASDAQ, the company's 2022 Inducement Equity Plan is explicitly designed to lure "new employees" with equity awards, bypassing the need for shareholder approval under NASDAQ Marketplace Rule 5635(c)(4). This flexibility is critical for early-stage firms racing to innovate. For instance, in Q3 2025, Momentus granted 2,000 restricted stock units (RSUs) to two new hires, with a four-year vesting schedule tied to continued employment. Such structures align employee interests with long-term company success, ensuring that key hires stay the course through the inevitable ups and downs of space-tech development.

The December 2025 inducement awards-totaling 728 RSUs for four new employees-further underscore this strategy. By spreading vesting over four years, Momentus reduces the risk of short-term attrition while incentivizing contributors to hit milestones in its ambitious orbital refueling and debris-removal projects. For a company burning through cash and chasing contracts with entities like NASA and the Department of Defense, securing specialized talent is less of a luxury and more of a lifeline.

Shareholder Risks: The Dilution Dilemma

Yet, the aggressive use of equity incentives raises red flags. Momentus' 2021 Equity Incentive Plan initially reserved 8,547 shares of Class A common stock for awards, and the 2022 Inducement Plan appears to be expanding this pool. While dilution is standard in high-growth sectors, the lack of shareholder oversight for inducement grants introduces governance risks. As stated in SEC filings, these awards require approval only by independent directors or the compensation committee, not by investors. This creates a potential conflict of interest, where management could over-issue shares without accountability.

Moreover, the value of these RSUs hinges on Momentus' stock performance. If the company fails to deliver meaningful revenue or technological breakthroughs-both of which are far from guaranteed in the space sector-these awards could become little more than symbolic gestures. For example, a non-employee director's RSU grant in 2021 included 29.2% vesting in November 2021, with the remainder vesting in 34 monthly installments. If the stock languishes, such staggered vesting schedules may not adequately compensate recipients for their contributions, potentially undermining morale and retention.

Governance in the Gravitational Pull of Growth

The 2022 Inducement Plan's eligibility criteria add another layer of complexity. Only individuals with no prior ties to Momentus qualify, ensuring that inducement awards aren't used as a backdoor to reward existing executives. While this aligns with NASDAQ rules, it also highlights the company's focus on fresh talent-a double-edged sword. On one hand, it fosters innovation; on the other, it could create a "revolving door" culture if new hires fail to integrate smoothly.

Investors should also scrutinize the financial implications. Each inducement grant reduces the ownership percentage of existing shareholders. For a company with a market cap that's swung wildly in recent years, this dilution could erode value if growth doesn't materialize. However, if Momentus successfully scales its services-say, by securing a major contract with SpaceX or Blue Origin-these equity costs could be justified as an investment in future dominance.

Conclusion: Calculated Risk or Costly Gamble?

Momentus' equity strategy reflects the classic trade-off between growth and governance. For a commercial space firm in its ascent, the inducement awards are a calculated risk-a way to secure the talent needed to turn orbital ambitions into reality. But without clear milestones or revenue traction, these awards risk becoming a financial black hole.

Investors should monitor two metrics: first, the rate of new hires versus share issuance, and second, the company's ability to convert its R&D into paying customers. If Momentus can demonstrate that each RSU is fueling tangible progress-like a successful mission or a signed partnership-then the dilution may be worth it. If not, shareholders could find themselves watching their stakes shrink faster than a satellite's orbit.