SpaceX and Tesla Boards Form Special Committees to Review Potential Merger

The boards of SpaceX and Tesla have each established special committees composed of independent directors to review a potential merger between the two companies. This move was initiated at the request of shareholders, according to Elon Musk, who serves as CEO and is the largest individual shareholder of both firms.

Musk stated that he cannot participate in the discussions of these committees due to his conflicted position. "It’s an odd kabuki dance where two groups of people are talking, and I can’t be in the conversation," Musk said during SpaceX’s third-quarter earnings call. He did not name the specific members of the committees but confirmed they consist of independent directors.

According to Tesla’s October 19 proxy filing, the company has seven independent board members under Nasdaq listing standards, including Board Chair Robyn Denholm, Ira Ehrenpreis, former CTO JB Straubel, Joe Gebbia, Jack Hartung, James Murdoch, and Kathleen Wilson-Thompson. Neither Elon Musk nor his brother Kimbal Musk are considered independent.

SpaceX lists six independent directors, including Ira Ehrenpreis, who also chairs the compensation and nominating committee. Other independent directors include Randy Glein, Donald Harrison, Steve Jurvetson, Luke Nosek, and Roelof Botha. Antonio Gracias, Elon Musk, and SpaceX President Gwynne Shotwell sit on the board but are not independent.

Musk expressed support for the merger idea but cautioned that it is not guaranteed. "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. The special committees have not yet reached an agreement on any transaction terms.

Musk noted that while SpaceX’s IPO gives him over 50% voting power, facilitating shareholder support, Tesla requires a 50% vote from all shareholders, presenting a higher hurdle.