A potential Tesla-SpaceX merger could increase Elon Musk’s wealth by more than $110 billion by accelerating Tesla share vesting and potentially unlocking additional compensation.
Elon Musk has confirmed that Tesla and SpaceX have established special committees to examine a possible merger between the two companies. The announcement came during a SpaceX earnings call, where Musk highlighted the benefits of closer cooperation between the businesses.
A potential combination could reshape Musk’s business empire, bringing together Tesla’s electric vehicles and robotics operations with SpaceX’s space technology and artificial intelligence ambitions.
The proposed deal could also have significant implications for Musk’s personal wealth. According to calculations based on the Bloomberg Billionaires Index, a merger could increase his fortune by more than $110 billion through the accelerated vesting of Tesla shares that are currently scheduled to vest in 2028.
Musk’s potential financial gains could extend beyond the accelerated vesting of existing shares. The structure of a merger and Tesla’s valuation in the transaction could determine whether additional compensation becomes available under his existing pay arrangements.
Tesla and SpaceX did not respond to requests for comment on the merger discussions, according to the supplied report. News of the potential deal, combined with strong quarterly earnings from SpaceX, helped Musk’s fortune rise by more than $60 billion on Wednesday as shares of both companies advanced.
However, the possible financial benefits remain conditional on the final transaction structure and the application of relevant compensation provisions.
Musk received a record-setting compensation package from Tesla last year that could be worth nearly $1 trillion if all conditions are met. The 10-year award is linked to demanding operational and financial targets.
Among the operational goals are the delivery of one million Optimus robots, the deployment of one million robotaxis in commercial operation and the delivery of 20 million vehicles.
The package also includes market-capitalisation milestones ranging from $2 trillion to $8.5 trillion. According to the supplied report, none of the operational or market-value targets has yet been achieved.
A change in control could alter how the compensation is calculated, potentially allowing Musk to receive shares based on Tesla’s valuation in a merger rather than having to meet the original operating milestones.
Tesla’s compensation arrangements include provisions that may apply if a transaction changes control of the company. Such provisions could be triggered if Tesla’s existing shareholders retain less than 50% of the voting power in the surviving company or its parent.
Whether this condition would be met depends on the merger’s structure and the relative valuations of Tesla and SpaceX. The supplied report notes that SpaceX is currently valued at roughly one-third more than Tesla, making the ownership outcome an important consideration.
If the provisions apply, Musk’s compensation could be calculated using Tesla’s value in the deal. For example, a Tesla valuation of $2 trillion—the first market-capitalisation milestone in his package—could unlock shares with a net value exceeding $6 billion.
Jason Schloetzer, an associate professor of accounting at Georgetown University’s McDonough School of Business, said shareholders should carefully examine how the deal is structured and how the compensation committees address potential conflicts of interest.
A potentially larger benefit could arise from Musk’s 2018 Tesla compensation award.
The original package granted him approximately 304 million stock options, subject to operational and market-capitalisation milestones that were subsequently achieved. Under an implementation arrangement negotiated with Tesla’s board earlier this year, Musk received approximately 286 million shares through a net-settlement process.
Those shares are scheduled to vest in January 2028, providing an additional incentive for Musk to remain with Tesla. However, a change-in-control event could trigger immediate vesting.
The shares are currently worth more than $110 billion and are excluded from Musk’s reported net worth in the Bloomberg Billionaires Index because they have not yet vested.
Although the shares are subject to a five-year holding period after vesting, the agreement includes certain exceptions for change-of-control events that could potentially permit earlier sales.
Musk also holds a separate compensation arrangement at SpaceX, involving up to 1.3 billion restricted shares tied to financial and operational milestones.
These conditions include targets related to a human settlement on Mars and the computing capacity of planned space-based data centres. SpaceX’s board can adjust market-capitalisation milestones following mergers or acquisitions.
The company previously adjusted the targets after SpaceX acquired Musk’s artificial intelligence startup, xAI. A similar adjustment could be made if Tesla and SpaceX combine, preventing the transaction from making the compensation targets artificially easier to achieve.
A merger could also raise questions about Musk’s future compensation, particularly if some of his existing Tesla awards are forfeited or altered.
Schloetzer suggested that the combined company’s board could face pressure to create a new equity-based package to retain Musk and maintain his engagement with the business.
Any new arrangement would depend on the final transaction, board decisions and the compensation framework adopted by the combined company.
Conclusion
A potential Tesla-SpaceX merger could significantly affect Elon Musk’s wealth by accelerating the vesting of Tesla shares worth more than $110 billion and potentially changing other compensation arrangements. However, the actual benefits would depend on the deal’s structure, valuation and change-in-control provisions. Until a transaction is finalised, the projected financial gains remain conditional rather than guaranteed.