TLDR
- A merger clause in Musk’s Tesla pay deal would wipe out key performance targets if Tesla is acquired
- SpaceX acquiring Tesla could automatically count operating goals as achieved, leaving deal price as the main factor in Musk’s payout
- Musk controls about 86% of SpaceX’s voting power, giving him heavy influence over any offer
- Tesla shareholders and potential lawsuits remain the main obstacles to any deal
- The maximum payout has dropped from $1 trillion to around $824 billion due to more Tesla shares being issued
Tesla shareholders approved a record pay package for Elon Musk last year worth up to $824 billion in stock. To collect it, Musk normally needs to hit 12 market-value targets and a matching set of operating goals.
Deep in a $1 trillion pay package approved by Tesla’s shareholders is an escape clause that could pay off for Elon Musk in several ways if he folds the automaker into his SpaceX empire. https://t.co/cHTfjScUGq
— The Wall Street Journal (@WSJ) August 11, 2026
Those operating targets are steep. They include delivering Tesla’s 20 millionth vehicle, selling one million robots, and putting one million robotaxis on the road.
But buried in the pay agreement is a clause that changes everything in a takeover. If Tesla is acquired, those operating milestones are automatically treated as complete.
That would leave the deal price alone to determine how many shares Musk receives. Each additional $500 billion in deal value unlocks more shares, up to a maximum at an $8.5 trillion valuation.
How Much Control Does Musk Have Over a Deal?
Musk controls roughly 86% of SpaceX’s voting power through Class A and supervoting Class B shares. His Class B holdings also let him appoint a majority of the SpaceX board.
That means Musk would have heavy influence over the price SpaceX offers for Tesla, even though he would be on both sides of the deal.
In a $2 trillion all-stock deal, Tesla investors would receive around $502 per share after accounting for the shares issued to Musk. Current Tesla shareholders would own most of the combined company.
Musk would hold around 32% of the combined company’s shares. But through supervoting Class B shares, he would control about 73% of voting power.
What Could Stop It?
Tesla shareholders hold real power here. Musk owns just under 20% of Tesla’s voting power, so any deal needs investor approval.
Unhappy Tesla shareholders could also challenge a deal in court. Texas law, where both companies are based, gives SpaceX stronger legal protection from lawsuits, but Tesla investors would have a clearer path to legal action.
Musk also faces a financial trade-off. A higher offer for Tesla unlocks more of his compensation but dilutes the economic stake of existing SpaceX shareholders, many of whom joined during SpaceX’s recent IPO.
SpaceX has authorized a class of nonvoting shares that have not yet been issued. These could potentially be used in an acquisition to limit dilution of existing SpaceX shareholders’ voting power.
As of now, neither Musk, Tesla, nor SpaceX has commented on any merger plans.
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