Tesla-SpaceX merger could add $110B to Musk's wealth
What's the story
Elon Musk has confirmed that both SpaceX and Tesla have formed special committees to explore a possible merger. The news sent shares of both firms soaring, adding over $60 billion to Musk's net worth on Wednesday alone. Depending on the details of the merger, it could add more than $110 billion to his wealth by accelerating the vesting of Tesla shares that are due to vest by 2028.
Financial implications
Musk's 2025 compensation package could also be unlocked
The merger could also unlock billions more from Musk's 2025 compensation package, without Tesla having to meet the operational milestones usually required for such payouts.
This is due to change-in-control provisions in Musk's pay package that would be triggered by a merger.
If Tesla is valued at $2 trillion in the deal, Musk would unlock shares worth over $6 billion.
Pay package
Musk's Tesla pay package details
Musk's 2018 Tesla pay package was worth nearly $1 trillion if fully earned. It involved ambitious performance goals such as delivering a million Optimus robots, having a million robotaxis in commercial operation, and delivering 20 million vehicles over 10 years.
The deal also included market capitalization targets of between $2 trillion and $8.5 trillion. However, all operational and market-cap milestones have yet to be achieved.
Merger impact
Change-in-control provisions explained
Change-in-control provisions in Musk's pay package could be triggered by a merger if Tesla's current shareholders end up with less than 50% of the voting power in the surviving company or its parent.
This could happen as SpaceX is currently worth about one-third more than Tesla.
If these provisions are triggered, operational milestones would be ignored and Musk's payout would be calculated based on Tesla's market value in the deal.