Wall Street loophole that could unlock $824,000,000,000,000 pay day for Elon Musk
One of the biggest conditions of Elon Musk's immense conditional pay package with Tesla is the financial success of the company, yet investment experts have spotted an unexpected Wall Street loophole that would potentially unlock an additional $824 billion for the world's richest man as a result.
It all revolves around the prospect of SpaceX buying out Tesla, which Musk has done with two of his other companies previously, as xAI purchased X in an unexpected yet lucrative deal.
With Musk legally having the power to do 'whatever he wants' with either company, according to corporate law expert Professor Ann Lipton of the University of Colorado, there's technically nothing stopping him from activating a purchase right this moment and triggering the vast majority of the conditions laid out in his record-breaking compensation agreement.
Merging Tesla and SpaceX could also see investors in both companies earn considerably alongside Musk, as reported by The Wall Street Journal, although the former's CEO would uniquely benefit as he holds an immense number of shares in the combined companies.
Would Musk still control a combined Tesla and SpaceX?
While Musk is currently the CEO of Tesla and 'lead designer' at SpaceX, some have wondered whether he would retain dominant control over both in the event of a merger.
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Key to this would be the direction that the sale is made, as SpaceX acquiring Tesla would be the ideal route for Musk, as he has considerable say over any decision – including purchases – at SpaceX.
This is thanks to his Class B shares, which offer 10 times the voting power of Class A alternatives with Musk holding the vast majority of these, giving him an effective voting power of 73% over the combined company.
He currently has 86% control over any prospective vote at SpaceX, with the power also to implement a board that backs his decisions, making a sale near-impossible to avoid if Musk so desired it.
That wouldn't be quite as easy from the Tesla side of things, however, with Musk holding under 20% of the vote at the electric vehicle giant, creating a clearer path for investors in the car company to sue if they aren't happy with the deal.
How much money would this make Musk?
The amount of money earned by Musk in the event of a merger would depend on how much SpaceX spent on Tesla, but with a buyout of around $2 trillion, that would leave the individual per-share value at $506.
Combining this with the increased shares Musk would receive from activating the financial-based conditions of his pay package, and the world's richest man would effectively double his current net worth with an immediate injection of around $824 billion.
This is lower than the touted $1 trillion figure due to the increased number of Tesla shares available as a result of the buyout, but with that amount of money suddenly in your bank account you can't exactly complain.
It all hinges on a clause on the fifth page of Musk's 'Performance Award Agreement' from Tesla, as it deems half of the targets to be immediately achieved in the event of an acquisition or take over, with the rest simply related to the company's market value which subsequently would be met or missed based on the final deal price.
This is what allows Musk to 'cheat' his current conditions and milestones – which include lofty goals for Tesla's robotaxi and Optimus robot services – and receive a massive payout right now with practically zero downsides.