SpaceX and Tesla boards form special committees to review merger


The boards of SpaceX and Tesla have each formed special committees to review a possible merger. The special committees, which consist of independent directors, were created at the request of shareholders, according to Elon Musk, CEO and the largest individual shareholder of both companies.

“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 in response to a question during SpaceX’s third-quarter earnings call.

Musk didn’t name the members of these special committees, only noting that they were independent directors. Tesla has seven independent board members under Nasdaq’s listing standards, including board chair Robyn Denholm, Ira Ehrenpreis, who is also a committee chair, former Tesla CTO JB Straubel, Joe Gebbia, Jack Hartung, James Murdoch, and Kathleen Wilson-Thompson, according to the company’s October 19 proxy filing.

Neither Musk, nor his brother Kimbal Musk, are independent. Denholm, Gebbia, Ehrenpreis, Hartung, Murdoch, and Wilson-Thompson sit on a variety of established committees overseeing audit, compensation, and corporate governance.

SpaceX lists six independent directors, including Ehrenpreis, who is also the chair of the company’s compensation and nominating committee. Randy Glein, Donald Harrison, Steve Jurvetson, Luke Nosek, and Roelef Boutha are also considered independent directors.

Antonio Garcias, Musk, and SpaceX president and chief operating officer Gwynne Shotwell are also on the board, but not considered independent. Garcias, who once sat on Tesla’s board, founded and leads Valor Equity Partners, which has a 3.4% stake in SpaceX. Garcias’ firm also financed SpaceX’s AI hardware purchases through leaseback arrangements.

Musk said he supports the idea of the merger, but cautioned that it is not a guaranteed outcome.

“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, adding that he thinks it would be a good idea. “At the end of the day, the shareholders have to be supportive of this.”

The special committees have not reached agreement on the terms of any transactions, he said.

The SpaceX IPO cemented Musk’s grip on the company — he has more than 50% voting power — which would make it easier to garner support for a merger from SpaceX shareholders. It is a much bigger hurdle over at Tesla, where the company would need a 50% vote from all shareholders, not just those who vote, Musk noted.

“I do think there’s a lot of merit to combining the companies as we are pretty much in the superintelligence singularity,” Musk said, adding there was a lot to be gaining from cooperating on developing AI software, robotics, SpaceX’s orbital AI data center project Starmind, and Terafab, the joint chip manufacturing project between Tesla and SpaceX.

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