A SpaceX/Tesla merger could trigger Musk's $1T pay package automatically

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A SpaceX/Tesla merger could trigger Musk’s $1T pay package automatically

Jameson Dow | May 31 2026 - 8:00 am PT

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SpaceX has a big IPO coming up, but the next step might be a merger of SpaceX and Tesla. And if so, it could be a backdoor to triggering Elon Musk’s trillion-dollar pay package automatically, without having to meet any of the operational milestones, thus diluting everyone’s shares without delivering on the promises that were made.

Late last year, Tesla shareholders voted on the largest CEO pay package ever, orders of magnitude higher than the second-largest ever (which was also for Musk, and also an order of magnitude larger than the third-largest).

The package was utterly ridiculous in its design, but the marketing effort put on by Tesla to convince shareholders to vote for it succeeded, and the measure passed. Despite that it will dilute shareholders and retain a bad CEO who has overseen – er, uh, been distracted by being racist on twitter during – the company’s falling sales, enough reasonable people seem to have already sold their shares that the ones who remain were gullible enough to make this bad decision.

But the package did have one redeeming quality to it. It was designed in such a way that it was split into 12 tranches of stock, and each tranche had increasingly difficult performance milestones attached that would require the company to grow not just by market cap, but in its operations.<br>Advertisement - scroll for more content

In short, Musk couldn’t get his money just by pumping the stock and doing financial tricks in one of the least reality-based markets in history, Tesla would actually have to sell things like ahealthy company might. Like delivering 20 million Tesla vehicles, 10 million FSD subscriptions, 1 million “Bots,” or 1 million commercial Robotaxis, along with several milestones related to longterm profitability.

The nature of the operational milestones was an issue – a couple of them would be quite easy to meet or have built-in shenanigans of their own, thus granting Musk tens of billions of dollars, still the largest CEO pay package in all of history, for virtually no effort – but the concept was still there.

(SpaceX has similar milestones set out, but they’re even more ridiculous – 100TW of orbital compute and a 1 million population Mars colony, neither of which will happen)

It’s even right there in the official name of the award: “2025 performance-based stock agreement.”

So, both through the marketing of the award (which is a problem itself – Tesla should not have spent money to market this award, nor should Musk’s friends and family on the board have been involved in recommending it), and even the naming of it, Tesla wanted everyone to know that it would only be given out if the company did well.

And yet, it was all a lie.

How Musk can get $1 trillion in stock with zero Tesla sales

It turns out there was some language in the contract that went largely overlooked.

The language is part of the “change in control” section, which reads like this:

IV. Determination of Earned Shares upon Change in Control

Notwithstanding Sections I, II and III above, in the event of a Change in Control, the Operational Milestones shall be disregarded and the Market Capitalization shall equal the product of (a) the total number of outstanding Shares immediately prior to the effective time of such Change in Control, as reported by the Company’s transfer agent, and (b) the greater of (i) the most recent closing price per Share immediately prior to the effective time of such Change in Control, as reported by the Primary Exchange (or other reliable source selected by the Administrator if the Primary Exchange is not reporting a closing price for that day), and (ii) the per Share price (plus the per Share value of any other consideration) received by the Company’s shareholders in the Change in Control. For purposes of Certification, the Administrator shall assess in accordance with the immediately preceding sentence the extent to which the Market Capitalization Milestones will be satisfied as a result of the Change in Control. To the extent that the Shares allocated to a Tranche have not become Earned Shares as of immediately before the effective time of the Change in Control and otherwise do not become eligible to become Earned Shares as a result of the Change in Control, such Tranche will be forfeited automatically as of the effective time of the Change in Control.

There. Did you catch it?

Okay, that part is dry and nobody cares. Blah blah, things are different if he sells the company before reaching the milestones. Of course.

A “change in control” could mean several things, but one of the things it could mean is a buyout or merger.

But here’s the deal: the...