The proxy statement filed by Tesla for its 2026 annual shareholder meeting reveals that a director previously considered independent has now joined SpaceX’s board. Ira Ehrenpreis, who currently chairs Tesla’s Compensation and Governance Committees, joined SpaceX’s board in February.
Several details in the document align with the merger of Tesla and SpaceX, including three voting proposals, an automatic voting procedure set to take effect at the next vote, and Elon Musk’s compensation clauses triggered based on the transaction price.
Shareholders will vote on three matters. The first is the re-election of Elon Musk, board chair Robyn Denholm, and JB Straubel for three-year terms. The second is a non-binding advisory vote on compensation. The third is to approve PricewaterhouseCoopers to continue serving as Tesla’s auditor, a role the firm has held since 2005.
The board also stated that it will not resubmit proposals to eliminate the classified board structure or remove Tesla’s supermajority voting requirement. Last year’s attempt received a 73.6% participation rate, but only 39.4% of outstanding shares supported it, falling short of the required threshold. As a result, the classified board will remain in place, and the terms of the three directors whose terms are up for renewal this year will be extended until 2029.
Musk's 2025 compensation: $158 billion on paper
The above figures are not cash. The amount includes $132.3 billion in CEO performance bonuses for 2025, valued assuming all milestones are achieved, and a $26.1 billion "interim bonus" in August 2025. Musk relinquished this interim bonus in April after the Delaware Supreme Court reinstated his 2018 compensation package.
Tesla also included its own "realized compensation" table in the filing, showing that Musk received $0 in compensation for 2025, with a compensation ratio of "0.00:1." This figure is accurate for 2025. However, the same proxy statement discloses that on June 16, 2026, Musk exercised all 303,960,630 options granted under his 2018 plan, with Tesla withholding 17,531,857 shares to cover the $23.34 exercise price. This implies a stock price of approximately $405 at exercise, representing a value of about $116 billion.
Tesla’s income statement presents a third interpretation. The 2025 award has already generated $689 million in share-based compensation expenses, with $162 million recognized in 2025 and $527 million recognized in the first half of 2026. Tesla only recognizes expenses for milestones it considers “probable,” and among the 12 operational milestones, the company has classified only one as “probable”: cumulative deliveries of 20 million vehicles.
FSD subscriptions, Optimus, robotaxi, and all EBITDA targets have been classified as "not achievable," with unconfirmed expenses ranging between $105.8 billion and $120.4 billion.
All of this occurred after Tesla's net profit declined 46% to $3.86 billion, and revenue fell for the second consecutive year to $94.8 billion.
How will the merger benefit Musk?
Typically, each of the 12 tranches requires the simultaneous achievement of both market capitalization milestones and operational milestones. Market capitalization milestones are calculated based on the average values over the past six months and the past 30 days; operational milestones represent a separate requirement. In the event of a change of control, the operational milestones will no longer apply. Tesla’s market capitalization will be calculated only once: as the higher of (i) the number of outstanding shares multiplied by the last closing price, or (ii) the per-share value received by shareholders in the transaction. Any tranches earned under this calculation will vest immediately, rather than over a period of 7.5 to 10 years.
Whether the merger of Tesla and SpaceX constitutes a change of control depends on the transaction structure. However, both of Musk’s compensation packages are now designed to trigger immediate payment if this occurs.
The auto-vote button is here
Three of the nine board members are related to SpaceX.
Ehrenpreis is not the only connection. Elon Musk leads SpaceX, and his brother Kimbal Musk, also a Tesla director, previously served on SpaceX’s board. This means one-third of Tesla’s nine-member board has ties to SpaceX.
Tesla’s board still classifies Ehrenpreis as an independent director. As chair of the Nominating and Corporate Governance Committee, his responsibilities include “considering potential conflicts of interest involving Tesla’s directors and executives.”
Cash flows are not one-way. Tesla's proxy statement shows revenue of $430.1 million from xAI in 2025, primarily from Megapack, and $143.3 million from SpaceX, primarily from vehicles.
During the Q2 earnings call in July, Musk stated that any merger must be "completed through proper procedures."
Electrek's perspective
Ehrenpreis has served on Tesla's board since 2007. The 2018 changes stemmed from the Tornetta lawsuit, while the automatic voting procedure was presented as a solution to low retail investor participation.
However, when viewed together, it resembles a checklist of consolidated voting measures: Musk’s compensation package triggers rapid payments based on the transaction price; directors responsible for reviewing conflicts of interest sit on the board of another company; the board tasked with negotiating the transaction will remain in place until 2029; and retail shareholders are offered a button that automatically turns them into ongoing voting supporters of the board—including on the merger—unless they opt out.
The issue is who is sitting on the other side of the table. Musk holds about 20% of Tesla’s shares and controls approximately 85% of SpaceX’s voting power. Regardless of the final exchange ratio agreed upon by both boards, he stands to benefit from both sides of the deal. This is precisely when Tesla shareholders most need a board that is as independent as possible. Instead, the board is drawing closer to SpaceX rather than maintaining distance.
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