SpaceX and Tesla have set up separate board committees to consider a merger, Elon Musk said. According to Musk, the committees have not reached agreement on the terms of any transaction. He said shareholders asked for the committees, each of which is made up of independent directors.
As both CEO and the largest individual shareholder at each company, Musk has a conflict of interest that keeps him out of the discussions. He explained his absence when asked about the process on SpaceX’s third-quarter earnings call.
“Because I’m a conflicted party, I can’t actually be in the discussions of the special committees, so it’s this sort of a … it’s an odd kabuki dance where two groups of people are talking, and I can’t be in the conversation,” Musk said.
Musk supports bringing the companies together but said a merger shouldn’t be taken for granted. “I think some people out there assume that a SpaceX and Tesla Motor is a certainty, and I think that would be overstating it,” he said, while describing the combination as a good idea. “At the end of the day, the shareholders have to be supportive of this.”
The shareholder approval hurdle would be higher at Tesla. SpaceX’s IPO left Musk with more than 50% of its voting power, strengthening his control and making support there easier to secure. Tesla, by contrast, would need 50% of all shareholders to vote in favor, rather than just half of those casting votes, Musk said.
The membership of either special committee hasn’t been disclosed. Musk said the directors serving on them were independent but didn’t provide their names.
In its October 19 proxy filing, Tesla lists seven board members who meet Nasdaq’s standards for independence: board chair Robyn Denholm; committee chair Ira Ehrenpreis; former Tesla chief technology officer JB Straubel; Joe Gebbia; Jack Hartung; James Murdoch; and Kathleen Wilson-Thompson. Neither Elon Musk nor his brother Kimbal Musk is classified as independent.
Denholm, Gebbia, Ehrenpreis, Hartung, Murdoch, and Wilson-Thompson serve on Tesla’s established committees covering audit, compensation, and corporate governance. Those published roles don’t reveal who serves on the special committee considering a merger.
SpaceX names Ira Ehrenpreis, Randy Glein, Donald Harrison, Steve Jurvetson, Luke Nosek, and Roelef Boutha as its six independent directors. The compensation and nominating committee is also chaired by Ehrenpreis.
Antonio Garcias, Elon Musk, and Gwynne Shotwell, SpaceX’s president and chief operating officer, also sit on its board but aren’t classified as independent. Garcias previously served on Tesla’s board and is the founder and head of Valor Equity Partners. Alongside its 3.4% holding in SpaceX, Valor has used leaseback arrangements to finance AI hardware purchases by SpaceX.
Musk also pointed to technology as a reason to combine the companies. “I do think there’s a lot of merit to combining the companies as we are pretty much in the superintelligence singularity,” he said. He said the companies stood to gain from cooperating on AI software, robotics, Starmind (SpaceX’s orbital AI data center project), and Terafab, the joint Tesla and SpaceX chip manufacturing project.
