Elon Musk could gain majority voting control of a company formed by a merger of SpaceX and Tesla, even without meeting the demanding targets in his compensation packages. That does not mean, however, that he would immediately receive $1 trillion in shares.
A Reuters analysis, based on a review of the compensation plans and assessments by six executive compensation experts, shows that Musk’s immediate gain would be decisive influence over the direction of the combined company, not a $1 trillion payout.
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According to Barclays analysts, if SpaceX buys Tesla, Musk would own about 37% of the new company but hold 56% of the voting rights. The difference stems from SpaceX’s share structure: some shares carry ten times the voting power of ordinary shares.
The compensation plans at the two companies work differently. At SpaceX, Musk has already received the voting rights attached to the shares included in the plan, although he still has to meet the targets to receive their economic value. As a result, he controls about 85% of the company’s voting rights.
At Tesla, the shares and additional voting power depend on meeting operational and financial targets. Shareholders approved a package last year potentially worth up to $1 trillion, but Musk has so far met none of its targets. Even if he met them all, his share of Tesla’s voting rights would reach about 29%.
A potential acquisition of Tesla by SpaceX could also affect how the compensation is calculated. Tesla’s plan provides that, in the event of a change of control, Musk could receive awards tied to market capitalization targets without meeting certain operational targets, including putting one million robotaxis on the road.
The first award, however, would require Tesla’s market capitalization to reach at least $2 trillion, compared with its current valuation of about $1.6 trillion.
Following a merger, SpaceX’s board could revise the terms of Musk’s compensation and adjust the financial and operational targets to reflect the size of the new company. The current plan includes goals such as establishing a colony of one million people on Mars and building giant data centers in space.
Research firm Equilar estimates that the shares covered by the SpaceX package could be worth $719 billion if the highest market capitalization target is reached.
