This Australian could hand Musk a trillion-dollar payday

Robyn Denholm was keeping the books and pumping petrol at her parents’ Milperra service station in Sydney’s south-west before she was 10. Today, the Australian chartered accountant sits between Elon Musk and the largest pay packet in corporate history.

Denholm has chaired Tesla’s board since November 2018, when the US Securities and Exchange Commission forced Musk out of the role over his aborted plan to take the carmaker private.

The Wall Street Journal reported this week that a clause in Musk’s 2025 pay agreement means a SpaceX takeover of Tesla would wipe away half the conditions on his award.

Musk normally has to clear two sets of hurdles. Tesla must hit 12 market capitalisation targets, topping out at $US8.5 trillion ($12 trillion), and operationally deliver its 20 millionth vehicle, put a million robotaxis in service, and build a million Optimus robots.

The contract’s change-in-control clause creates a massive shortcut: in an acquisition, the operational hurdles vanish. Stock vests purely on the takeover price, unlocking a new tranche for every $US500 billion added to the deal and topping out at a full $US824 billion payout if the price reaches $US8.5 trillion.

Boston College accounting professor Mary Ellen Carter told the Journal the targets were meant to be a stretch. “All you have to do is be bought,” she said.

Josh Gilbert, eToro’s lead Asia-Pacific analyst, said the clause changes how Tesla’s share price should be read. “When the person who controls both companies has a trillion reasons to get a deal across the line, some of Tesla’s share price starts reflecting deal probability rather than fundamentals,” he told this masthead.

Musk controls about 86 per cent of SpaceX’s voting power and appoints a majority of its board. At Tesla he holds under 20 per cent, so a takeover needs shareholder approval. It also needs a price, set by the directors Denholm leads.

A buyout where the buyer sits on both sides of the table is normally handled by a special committee of independent directors, the process Denholm used to design the 2025 award, which she told investors was built around “incentives that will drive peak performance from our visionary leader”.

Her duty in a takeover is to Tesla’s shareholders, which means extracting the highest price she can from the buyer. That duty also pays Musk: every $US500 billion she adds to the price releases another slice of his award.

Her independence has been challenged before, notably by the Delaware judge who struck down Musk’s earlier pay deal. She is the highest-paid chair of any listed company in the US.

The route that does not involve a takeover is getting steeper. Tesla set a delivery record last quarter by cutting prices, but its operating margin collapsed to 1.4 per cent. “On last quarter’s numbers, the milestones look like a mountain,” Gilbert said.

Australians have a direct stake: more than 28,000 local retail investors were let into the SpaceX float in June, and Gina Rinehart tipped in $1.4 billion. SpaceX stock closed on Tuesday at $US133.29, below its $US135 issue price.

An all-stock deal – the structure Gilbert expects at that scale – would leave existing SpaceX holders “owning meaningfully less of a very different company,” he said.

Musk has not ruled out a merger, and Wedbush analyst Dan Ives puts the odds of a 2027 combination above 80 per cent. Gilbert rates a deal plausible but not inevitable, since the SpaceX board cannot wave through a transaction that does not stack up.

Tesla, SpaceX and Musk did not respond to the Journal. Denholm has not commented.

Any deal would go to Tesla shareholders for a vote. But its terms would first be negotiated and recommended by a board chaired by the director Musk picked to replace himself.

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